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About Google Book Search Google's mission is to organize the world's information and to make it universally accessible and useful. Google Book Search helps readers discover the world's books while helping authors and publishers reach new audiences. You can search through the full text of this book on the web at|http: //books .google .com/I assst- I • 50TH Congress, ) SEKATE. ( Ex. Doc. 51, IstSes&ion. J | Part 2. TESTIMONY TAKJSN BT THE piTED STATES PACIFIC RAILWAY COMMISSION, APPOINTED UNDER THE ACT OF CONGRESS APPROVED MARCH 3, 1887, ENTITLED "AN ACT AUTHORIZING AN INVESTIGATION OF THE BOOKS, ACCOUNTS, AND METHODS OF RAILROADS WHICH HAVE RECEIVED AID FROM THE UNITED STATES, AND FOR OTHER PURPOSES." BOBEBT E. PATTISON, or PurNSTLVAMiA, Okabmmt, £. ELLEBT Ain>EESON, of Nbw York, DAVID T. LITTLER, or Illinois, Commi$$ioner$. VOLUME I. t » t ( « *^n . ■ ' * » • ^ ■% r , REPORTED BT CHARLES p. YOUNG, of New York, Bborbtart and Stenographer to thb Commissioh. -4^^»-«- WASHINGTON: CWYBBNUENT PBINtiNO OFFIOB. 1887. '^42': 69 • • •• • • • • • • • • • • • • • • • • • • • • • ;• • ••, . • - •• • • • • • « d • • • . - . • . . TESTIMONY TAKEN BY THE UNITED STATES PACIFIC RAILWAY COMMISSION, AS TO THE WORKING AND FINANCIAL MANAGEMENT OF THE RAILROADS THAT HAVE RECEIVED AID FROM THE GOVERNMENT IN BONDS. New York, April 27, 1887. The Commissioa met at 10 a. m. Present: Gommissioner Pattison (chairman), and Oommissiouer An- derson. The secretary was directed, for convenience of reference, to prefix to the report of the testimony a copy of the act of Congress constituting the Commission, and defining its powers and daties. The act is as follows : AN ACT authorizing an investigation of the booJcSj accounts j and methods of railroads which have received aid from the United States^ and for otiier purposes. Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled j Tliat the President of the United States, be, and he is hereby, authorized to api>oint three commissioners, whose compensation shall be seven hundred and fifty dollars per month to each, and the necessary traveling expenses and board bills, for which proper vouchers shall be returned, to be approveort as to the kind, character, and amount ' of the assets of said companies, aud what assets of each company are now subject to the lien of the Government, and the value thereof; and also whether any dividends have been unlawfully declared by the directors or paid to the stockholders of said companies, and, if so, to what ex- tent, and whether the amount thereof may not bo recovered trora the directors unlawfully declaring the same or persons who have unlawfully received the same ; whether the proceeds of any trust funds or lands loaned, advanced, or granted have beeu diverted from their lawful use , whether any new stock or bonds hiivo buen issued orany'guaranfceaor pledges mode contrary to or without authority of law ; whether any of the directors, olHoors, or employees of said companies respectively have beeu or are now directly or indirectly interested, aud to what amount or extent, in any other railroad, steamship, telegraph, express, mining, construction, or other business company or corporation, anil with which uuy agreements, undertakings, or leases have been made or enteroil into; what amounts of luouoy or credit have been or are now loaneil by any of said companies to any person or corporation ; what amounts of money or credit have been or are now borrowed by any of said oompa- iiies, giving names of lenders and the purposes for which s^iid sums have iKnen or are now required ; what amounts of money or other val- uable consideration, such as stocks, bond)*, passes, and so forth, have l>een expended or paid out by said companies, whether for lawful or un- lawful jmrpoBes, but for which sufficient aud detailed vouchers have not beeu given or tiled with the records of said companies; and, further, to enquire and report whether said companies, or either of them, or their olUcers or ageuts. have paid any money or other valuable consid- eration, or done any other act or thing, for the purpose of iuflneucing U. 8. PACIFIC RAILWAY COMMISSION. 5 legislation, and to investigate and report all the facts relating to an alleged consolidation of the Union Pacific Eailroad Company, the Kan- sas Pacific Railway Company, and the Denver Pacific Railway and Tele- graph Company into an alleged corporation known as the Union Pacific Railway Company. Said investigation shall include the alleged sale of the stock of the Kansas Pacific Railroad Company to the Union Pacific Railroad Company, and all the circnmstances and particulars pertain- ing to said alleged sale, and whether any of the Pacific railroad corpo- rations which obtained bonds from the United States to aid in the con- straction of their railroads have expended any of their moneys or other assets in the construction, or to aid in the construction, of other rail- roads, or invested of their moneys or other assets in the stocks or bonds of any manufacturing, mining, and commercial companies or corpora- tions, or of other railroad corporations; and if any such expenditures or investments have been made, the extent and character thereof made by each of said corporations shall be inquired into, and also the present interest of any of said corporations in the railroads auxiliary to their respective railroads. And said commission shall also ascertain and report the names of all the stockholders in each of said companies, from its organization to the date of the investigation herein provided for, as they appear on the books of said companies at the date of its annual meeting in each year ; the amount of stock held by each ; what consideration, if any, wort to Congress, with such reeomuiendatious or comments as he may see fit to malce in the premises. The commisMiouers »hall ahto ascertain tbo average cost per aunum of Government trausportatioii iu the region now traversed by the Pacific railroa^ls between the year 1850 and the- completion of said roivds, and also the average coat per annum since sueli (Himplelion, and what iidditioual fiieilitiea have been furnished to the Ooveniment and the people by said roads; also to enquire what discount Iho Paeillc Ititilroad and its sev- eral branches were forced to make, in dispoeing of the bonds guaran- tceil by the Uovonimeut, to obtain the gold coin which was the cur- rcucy of the country through which the greater part of said roadit pass; also to at aIUt aiid itineod the act entitled 'An act to aid in the cuuBlrtiflion i<( a railmad aue«k of tlio |)li.v)tical obstructiuMB to bo ovi'rcomo. pTOliably it was tbe worst line tliat was over built. Wu rise 7,042 foot in 105 milee, anil all bnt 135 loot of tbat was ovt^roomu iti Hi tnilOH, with n oiasimuin grat('ce wo do not count; tbat van 110. Q. Offtgmdef— A. Tes, sir. (j. I'leane describe between wliat points tbe construction occurred. — A. It was ill California. It was to itn imaginary boundary line; there is no town or anything. Q, It U tbe present line of tbe road from San Francisco to tho Cali- fornia bonndary-t — A. i-'rom Sacramento; yes, sir. Wo had to ovor- flome a great many dilHcnlties when wo started. Iron was $62, and bo- fore we got across tho mountains iron was sold for 9150 a ton. Loeo- iaotivi-8 went from $S,<)00 to as bigb as $32,500. We i)aid 2J per cent, insnranco in the time of peace, and in tbe time of rebojlion we paid 17 per oent., insuring the goods around Cape Horn. Many things went up nioru tbuii 200, and I gness many things 300, per cent, advance from the tirni' wf niriuinrived the road before we got it completed. Q. Weir llir |iiii'i-s, as fixed by tbe original Crocker contract^ ehaiigiil :ii nil !— A. I think not. Tbat was tor grading, and it was paid in gold all tlie tiuio, so that however prices lluctuated here, we sold our paper hero for gold, and there was where tho expense came in. Q. Please describe tho prosecution of this enterprise after 1807 1 — A. That was built, I think, all in tho State of Kcvadaand Territory of Utah, I was not over tho line whilst it was building. I went over in the winter of 1SG7 and 1808. (J. During what years was the constrnotion prosecuted in Xevada audUtjih? — A. The rails connected at Promontory Point on the 10th ofMav, 18(i0; and it was .Inriiii,' Ihe Years l.S(i7 and 1608. It Was all done, I think, iu 1807 ami ls08;ii]k placet — A. I think the last consolidation was in 1870. It might havo been ISG9, There were two or three consolidatious ; I thiuk two — no, I do not know that there was but one. I was thinking of the iucreaae of the capit^U stock. We increased that two or three times as the work progressed. We did not. know exactly where wo wcro going when we started, but as the work progressed and wo found it of more importance wo incri>ascd the cap- ital stock. Q. Have you a copy of the articles of consolidation, showing the tfirmsf — A. 1 do not think 1 have here, but it is easily obtaine^l. 1 can COLLIS P HUNTINGTON. 13 8611(1 for it^ if I have Dot got it here. I could send to California aud get it Q. We would like to see the articles of consolidation, so as to under- stand them exactly. What other construction besides the construction that you have described has been undertaken by the Central Pacific! — A. The Central Pacific built from Lathrop to Goshen, 146 miles and a fraction, south. THE LATHROP BRANCH. Q. In what State is that? — A. That is in California. Q. Which is the point that is on the Central Pacific road? — A. Lathrop. Q. How far is that from San Francisco ? — A. By the direct line, the nearest line f Q. By railroad? — A. There are two lines of road that run from San Jos^ to Lathrop. It is about 80 miles by the shortest. Q. And this branch runs south from Lathrop to Goshen ? — A. Yes, sir. Q. About 110 miles? — A. One hundred and forty-six and a fraction, I think. Q. When was that road built? — A. That must have been built some- where between 1869 and 1870, 1 should think. Q. By»wh at contract was that road built? — A. I do not know. I think it was built by the Contract and Finance Company, though. Q. The same company that built the main line? — A. Yes, sir. Q. Have you ever seen the construction contract ? — A. No ; I do not believe I ever have. Q. Were you personally interested in it? — A. If the Contract and Finance Company were, 1 was. Q. As a stockholder ?-^A. Yes, sir. Q. Do you remember how that contract was made I By whoso vote? — A. No ; I do not. I do not think I have been there on the letting of any of the contracts. Q. Do you know whether that would appear in the books of minutes of the proceedings of the directors? — A. Very likely. Oh, yes, sir; it must have. It is regular business and it must appear. Q. Was it the practice of the company to make such contracts by res- olution of the board or by act of the president of the company ? — A. I should think that would be ratified by the board, at least. Q. Do you know what the contract price for the construction of the Lathrop branch was? — A. No ; I do not. Q. The gauge is the same as that of the main line? — A. Yes, sir; Q. Please tell us what sort of country it runs through, and what places this branch connects with. — A. It runs nearly south from Lathrop, and it did not connect with anything at the time. There was nothing up there : no town. Q. Does it follow the bed of the river? — A. It follows the valley. It goes up the San Joaquin Valley. There are a great many streams to cross. You can get the names off the map better than I can give them to you, but there are quite a number of streams. Every little distance, I noticed, there was a long bridge. Q. What was the object to be attained by the construction of that roadt — ^A. To develop the country. We thought it would be a good wheat country, but they could not draw the wheat very far by tCMims. There have been quite a number of towns built up since — Merced «qA U. 8. TACIFIC RAILWAY COMMISSION. ■■ Moilesto. Tliore are towna every few miles. I liavo not boon up tli( vallej' more tbaii throe or four timea myself, just inwsitiy tliruiigli miw invenient to buiUl by a coiitruet oompany, \Va have built most of our roads in that way. They are the ooiniianies, of course. Q. What other branches or transportation companies does the Central Paeitle own I— A. They own from lioaeviUe to the Stut« line. STEAUEQS. Q. Is there not soinelliing about tlio ferries and waterways ami ferry-^ hoitt^ (hat you own, or that you ive'quired l>efore yon started to build the California road? — A. No. We Iwiight tliose steamers with tlid Ouiiroruia PiiciQe. 1 diil tbat trailing myself. I bought the CalifonilOi Pucitlc, and with it 1 honghc what was called the California Navigation: Company's steamers, I believe. Q. When was thati— A. That was early in the seventies. Q. Uow many steamers were purchased T — A. I do not remember noir bow many. There mtiHt have been ten or udozi'ii, probably Q. Itetweei! what points wore tlieyuscdl — A. itetwefii .San Frau- Cisco and Sacramento, and San Francisco and Stockton. Q. Whore is Stockton ? — A. That is on tbe San Joaiiuin. Von go uii through Due end of the Bay of San Francisco, and then through Sau Pablo; aud then yon turn, as you go up north or northeast, au(l go Id tlie right, up to the San Joai]uin. it isalittleslongh that runs thnmgh that country. Q. These were mainly river boatat — A. Yes, sir. Nothing thatiuuv outside. Q. You say there were about ten ! — A. I should tliink so. Q. Fi-om whom did the company pnrchitse the.sc boats! — A. Wft bought thom with the California Paciflc. We bought that road ani they owned those steamers. Tbey had bought them with the Callfonili Steam Navigation Company, I think it was called. COLUS P. HUNTINGTON. 15 Q. The California Pacific was a railroad orgamzation, was it not A. Yes, sir. • Q. Between what points ! — A. Between Sacramento and Vallejo. Q. Is that corporation still in existence! — ^A. Yes, sir; it is. Q. You purchased the interest in the corporation!— A. We purchased the stock Q. Along in 1870 !— A. Yes, sir. Q. And in that way acquired title to the steamers ! — A. Yes, sir. Q. And subsequently the steamers were sold to the Central Pacific! — A. I think so. We used some of them ; running between San Francisco and Oakland. Q. How was that contract made between yourself and the Central Pacific Company for the transfer ! — A. I do not know. I did not have anything to do with that. That was done after I left California. Q. The Central Pacific acquired the title to your steamers ! — A. I know 'j but that was after I left. I bought the steamers with the Cali- fornia Pacific. Q. And then you sold them ! — A. Then I left. I was there only about thirty days, and when I left they wanted some boats, as I remember, for Oakland Ferry, and they made a transfer. Q. The terms to be paid must have been assented to by you before that went into effect! — ^A. No; not necessarily. I did the trading part of it. I did not buy it for myself. Q. You mean you bought the California Navigation Company for the Central Pacific ! — A. No ; Mr. Crocker was interested, and Mr. Stan- ford, and Mr. Hopkins, and several had a lesser interest ; but we four owned a large majority or it. By the Chairma n : Q. Was it a company purchase ! — A. No. Q. Individual purchase ! — ^A. Individual ; yes, sir. By Commissioner Anderson : Q. Then these individuals who owned the stock, and through the stock these steamers, must have assented to the terms of the transfer to the Central Pacific before it could go into eftect ! — A. We bought the stock of the California Pacific. I was not a director of the California Pacific, and it was not necessary that it should come before me. THE CALIFORNIA PACIFIC. Q. Who were the directors of the California Pacific! -A. M^jor Hammond, I think, was one. Q. Please give his full name. — ^A. H. P., I think, are his initials. We always called him " Major'^ Hammond. I could give you the names of the directors, but that is one of the things I could have to-morrow, I suppose, or the next day. Q. Do you remember the price paid for those steamers! — A. We paid Q. No; paid by the Central Pacific Company! — A. No; I do not. Q. Does it not figure in their reports at something like $800,000 ! — A. Well, it is possible. I do not remember, myself. By the Chairman : Q. Did you sell to the Central Pacific Company ! — A. No. Q • Who did sell ! — A. I purchased the stock of the Califoma PacifliQ for others and myself. They owned those steamers. Q. As individuals ! — ^A. The stock, as individual^. O. S. PACIFIC RAILWAT COMMISSION. ^ By Coiumissioner AlfDEBSOM : Q. Tim board of dlroctiou of tlio Culifornia Piwifiu tiDdoubte4ly con Irautol with tLo Ceiitral Pacific 1 — A. Yea, sir. Q. But I want to get how tbe contract WU8 made. — A. I could uot toll yon, but that is easily ascertained. ' Q. Were not the direotora iu the California I'aciflc alt intereatod nioiu or less in the Centra! Pacific! — A. No; 1 do not tbink they were! Major naminotiil, I know, was uot. That is, I know I do not think he wam. I never saw Ida name on the Ii«t. Q. liVhero ia tbe idaee of business of tbe California Pacifio to-day 1— A. San Francisco. Q. Are their books tburu I — A. Yes, sir. Q. As far as your recollection serves you, yuu do not know bow tbU transfer of the steamers came about, from tbe Cabforoia Pacific to thi' Central PacificT — A. No ; 1 do not. I probably did know at the tim but if I did it has passed from nic. y. You do not ramember tbe price imiil I — A. No ; I do nut. (j. Do you remember whether tbat tranaataioti bad any eflTcet on thi market value of the stock of the California Pacific which yon were tha owning! — A. No; I do not think it did, becanse it never bad mach ( any market valae. (j. Did it have any effect on tbe bonds 1 — A. No ; 1 do not tbink thv it woidd on the bonds. Tbe bonds rested ou the road, not on tbe steam era. ! do not see why it should, but I do not remember. We bough the stock of tbe California PactHc because tbey were ruuntng it to sel out to na. Tbey bothered us terribly, and they cnt rates, and they ba( the short line. It was nearly 82 miles to San Francisco that way, and the ucnrej^t way by nay of Niles waa 138 milfts over the Western Pacific, and we wera almost compelled to buy it. Wu did not buy it bucantift we wanted it, but simply to protect ourselves aud our interests. W< were large sbaro-hoider» iu the Central Pacific, and it waa as much foi that as anytbint;. So I uuderstivud; but I am only imiuirluK in regard to tbe tran«< fcr of the Iwats to tbe Central Pacific. — A. TItat was something doof after i left California ; at least, I was not there. It may have been I year or two later. I do not romemher. I was not there at the time f ' transfer was made. Q. Were you not consulted, as vice-president, as to tbo propriety of! acquirini;,' fhaf: property T — A, Very likely I was, but not necessarily, I used to do pretty important things here without consulting iny peo- ple and took I lie n-Mpoiisibility, and I used to tell them to do what th^ tbotiglit pm|HT wJHiout consulting me, and take the i-esponsibility. ^ li. How lii;i>; iifiiT acquiring those steamers did the Central I'tMiSt kfcii o|ieialiiig Ibom f — A. I tbink tbey arc operating them to day. Q. Tbey have operated thorn ever since T — A. Yee, sir. (j. Are you at all familiar with tbe details of tbo result of that 0l>er- ation and the earnings derived from them t— A. Somewhat. Tho pr^ its are very small. Ft is not iu a direct profit We never expected It to be. But it iaiu keeping things even, and not running everything afe! a loss. Wo bought off, at an early day, some sleamera that were po6' on. The Shin du Wan thfy put tin to sell to ns. Thoy asked $75,000, I know, and thev ran for almost nothing. It waa a boat worth about ilV'OO or jiliO.OdO. They finally got into trouble, and I tbinl we finally bought it for $18,000 or $20,000. They wanted toiaake f*" worth our while to buy them off. C0LLI8 P. HUNTINGTON. 17 Q. What is the next item of constmction that the Geutral Pacific un- dertook f — A. I do not remember any. The California and Oregon roail was built by the California and Oregon Company. Q. Started by them? — A. Yes, sir; was built to Tehama. I think, and then it was^consolidated with the Central Pacific, and they have been building it ever since. I think now they have got it to the State line. THE CALIFORNIA AND OBEGON. Q. What i.s the ultimate destination of that road T — A* From San Francisco to Portland, Oregon. It is built to the State line. But I un- derstood the question to be as to the Central Pacific's construction. An- other corporation in Oregon took up the constmction ; the Central Pa- dfie completed the road. It was started as the California and Oregon load Mid built, I think, to Tehama, and it has been built since to the State line by the Central Pacific. Since that time we have acquired eootrol of the Oregon and California. Q. The Central Pacific has acquired that! — A. No. A Who has acquired control of the Oregon T Do you mean some indindiuU! — A. Yes, sir; to run in that interest; to improve these (j. What was tlie Oregon and California corporation ! — A« That wsm SB Or;$oii eorpoTaitioo. Q. To coBScToc: a road from where T — A« From Oregon to the south liM <^tke Ssaie. to connect with the California and Oregon. Ours wm aSkd CiMafnia and Oregon, and theirs the Oregon and California^ and they hotk goi a land grant at the same time. Q. A Sa£t land grant T — A« Xo; from the Federal Government. Q. A Uniiail Slates land grant f — A^ Yes, sir. 4. Hire tb-:tse two roads united T — A. They have not. Q. Wjiai is ibe gap ! — A« It is about £cirty miles between the State hoe lad Aj^ilazkd. Q. I^ inDtccnMS^roeted pcvtion is in Oregon ! — A. Yc^, sir. Q. & thai i^ California and Or^^n is completed to the State iinet^- A Td I3ifr Scae liiMr. Q Wlieai ^jfcK tbis coostruction commenced by the California and Ortpm oootiiaBj ! — A. I tMnk in 1867 or ISSS ; I may be wrong, tmt I tim^ liie ae; ^lassed granting the land grant to them in I^$06, aufl I AmU lioiik wniihi two years afier they commenced and did some vodL and lifeL ri»*fj grf'ciil(il ilid voiir company iiiimutli- Hti'ly (■"TitiiiiRi lliti ■;orislniii|iiin f— A. No; I tliiiik not. i}. 1 low limjj ii lu-.i iri.I cliLpHiil ?— A. I r il wji» to Teliivtiiii, we 8lO|t]HMl tUeio some tiiEio. Hit wii^iit T('li)tiiiHl)eforolliocoiiaoliiii^' ri;.'lit idoiis, bnt. after wo haA [yMavd Iteilding tbero wasnu i>arlii.'iil,iMibj(-i'i i[i Ixiibling thin rouil uiiIi^M tiio Orcnoii ami California wiis buili. Wliiln it iH « very iin|)ortaut tlironyli line, it would not be an ininoiuniL line lo run to the State boundary ami havo no connection. Tlicn Ben. llolliday f;ot intoditlicHlties and Htopped construction on tlie Oregon end, and llieii we stopped. Q. lien, llollidity was eonstnietiug the Oregon! — A. Oregon and Oalifonim. He and bin friendn. They failed, I guess, pretty biwlly. Ai)d then Villard got the road and commenced worii, and wecoiiimenceil work nguin and bniltl^oEii Ueilding up to Deltii. We com me need work in the oai'ionH there. We worked along there very rapidly until there wax a lack of capital again on ViUard's part. Then wo ntupp'''! until tbiiiga took shape. About a year ago, in negotiating for the Orej; ami Ualilornia, I thought wo hiwl got it where it was pretty Mafe, and the nej;(il!atiiMi wiml.l U,- ii.TJi-i'l.-d, and w.' i-oiriim.iic.'.l work ajimii. That is wliy tli.'s,. I,il,-I„'s Imm> br^'U in lii.' raliloniia ;i.id Oregon. Q, Ho tliiil llic lulal riirisLiiiclioiniflliL' Caliluniiaiiiid Oregon n'piu- senis a period of aliuiU sixteen or cightevu joars, all told 1 — A. I should think HO. (J. Alter the consolidation, by whom was this roail constructed j under what contniets 1 I mean tlie California and Oregon, after tlio i-oiiMolidaliori. — A. 1 do not kuow. The Paeillo Improvement Company linili, I (liink. from Ifi'iMlii'^ lo tlie Stale line. I am not positive. g, J low riKiiiy liid.-N is tliai!— A. 1 think it ia 140 miles. (J. Whni, iw the piiinl on llio Central Pacific at which the junction in made with the California and Oregon? — A. Rosevllle. Q. What is the lensth from Uosevdio lo the State lino!— .V. 1 think it is alwmt ^(00 miles, Q. WliffTtS'tlio length from Itosevillo to Tehama? — A, 1 have iiot got that distance, but It must bo about 13U; itdocs not vary more thaa 'Jot '.i miles from that. Q. Who constructed tlie road from Tehama to Ueddiiig!— -A. That I do not know. y. Who is the president of tho Pacific Construction Company ! — A. The Piicilic Improvement is the name. Mr. Doty, 1 believe, is now. Q. Do you know whether Mr, Crocker or yonraelf or the other gen- tlemen whom you havo named as being in tho l'"iii;iiii-i> ('iim|iany were stockholders iu tho Pacific Improvement? — A. 1 lliiiik tlii\ iur. Q. llave yon ever seen tho contract between thr (.'ihIimI I'lRiik: Com pany and the Pacilln Improvement Company for the inuHlnicTion of that road between Iteddiug ami the State line?— A. Yes, sir; I have seen that. Q. Have yon a copy of that ?— A. No ; I have not. I saw it In Sa|t Fraiioisco when I was there last fall. COLLIS P. nUNTINGTON. 19 Q. Do you retnember tho rate i>cr mile? — A. Ye8; I tliiuk I <1(». I thiuk they took it in securities at about $125,000 a mile face value. I know I had some dispute with my i)eople about it, and I thought it was not enough. They thought it was. I had been over the Hue and it was such a terrible road to build that I did not believe they would get as much money out of the securities as they would have to pay out to build the road. Q. Can you state what the securities were f — A. I think it was 80,000 shares of the Central PaciHc and $2,100,000 of the Central Psiciiic bonds — $2,100,000 Central Pacific first mortgage bonds — that is, the bonds on that piece of road they were building. Mr. Tweed. The bonds secured on the California and Oregon Com- pany. Q. What are they called! — A. I think the Central Pacific was the oonsolidatiou. The first was California and Oregon, but these were called Central Pacific after the consolidation. Q. Are all the bonds guaranteed by the Central Pacific ? — A. They were not guaranteed ; they were simply a bond of the Central Piicific. That is no special guarantee. Q. Has the work under the Pacific Improvement Company contract been oompleted? — ^A. I hardly think that it has beeu fully completed, bat the road is built to the State line. There is always a great deal of ballasting after the rails are on, and it generally takes a couple of thou- sand dollars a mile to clean up and ballast. . Q. Have all the sto<;ks and bonds that were payable under that con- tract been issued, do you know f — A. I presume they have. Q. Have yon oompleted the general statement of all construction wh ich bas been effected by the Central Pacific from the commencement of the enterprise to date ?— A. I do not think of anything else. By the Chaibman : Q. How does the Central Pacific get into San Francisco T — A. The way it is operated now it is over the California Pacific and the Northern. Q. The Central Pacific itself has no entrance into San Francisc/O a.sa ooqiontion ? — A. Ye5, sir. Q. Belonging to it ? — A. Yes. We run down on the old Western Pa- dftctoyik^ and then there is a short line from there to Oakland, and firm that to San Francisco. Q. Who is the short line oi)erated by f — A. The Central Pacific. It is«ODS(didated with it. It is a part of it, as much as any other part. AFTEK>'00>' SESSION. OOLUS P. HUXTlXGTOy, being further examined, testified as fol- lovs: By CoQimisfrioner AyDEESOX: QaesdoiL Uo yon recollect about how much of the stock of the Cen- tral Patifie h»i b^een issued for construction l>efore the pa.0 miles across the mountains, and theu (32,000 a mile iu the great valley between the Rocky and the Sierras. I am quite correct in that ; I know I am correct. The same amount of first mort gage bonds were issued as the Government's. Q. 1)0 I understand you correctly that the Crocker contract called, for a similar advance in payments nhcu you reached the more difficult' porttona of the road T — A. Yes, sir; that must have been so, of necea- sity. now AND WHEBB DISPOSED OF. Q. Wore those bonds delivered by theoompany to the represeutativei, of the Crocker couti-act T — A. I am not so certain of that. I sold the Government bonds hero, I gness, perhaps all of them, myself, and bought gold largely for them, and I think, as far as they wore COU" cerncd, they most have been paid — the Crocker contract — in moneyti at least I sent over memoranda of what I bad done, and they distributed tbc accounts there. I never took inside of a ledger if 1 can helpit, and^ I most always cau. Mr. Uopkins was a most excellent manfortlioaa things; ho was a good bonk-keeiier and lawyer. Q. To whom wore the Government bonds first delivered by the Gov. ernmentf — A. They were all delivered to me, I think. Q. To von personally T — A. To mo porsoiially. Q. At Washington !— A. At Washington. Q. And brought by yon to Now York t — A. Brought by me to New York and sold. C0LLI8 P. HUNTINGTON. 21 Q. Sold to the pablic heref — A. Yes, sir. Q. Whose books contain the accounts of the sales f — A. I have not got them, bat I think that can be easily ascertained. Q. Probably they are at San Francisco! — ^A. Yes, sir; Fisk & Hatch might have them ; they sold a good many of them ; they were not known on the start, and when we first got them the people did not know what they were ; they would not take them for banking security. Q. The Government bonds f — A. The Treasury Department would not take the currency's ; there was a good deal of log rolling before holders could get the Oovernment's taken as collateral to bank issues ; we sold a lot at 89, 1 am quite sure, and bought gold at a very high premiam ; I paid as high as 2.20 for some gold, I remember. Q. Do you remember whether the Crocker contract called for the bonds or for money f — A. I do not ; my impression at first was that they took the securities ; but on that line, when I come to think of it, I sold all the bonds here ; I do not think any of them went to California. Q. May you not have sold them on account of the contractors f — A. I sent the account to Mr. Hopkins, and he distributed those matters in the way they were destined to go ; some here and some there. Q. Do you know what the history of the company's bonds were ! — ^A. Those bonds I sold here f Q. They were sent on from San Francisco to you here? — A. They were sent from San Francisco, and I guess I sold them all here. I am sorry to say we have not got any of them. Q. Were those sales for account of the Central Pacific Company or for account of the contractors f — A. My impression is that they were sold for the company. I sold the bonds and rendered an account every month of what I had done ; sent it to Mr. Hopkins. He settled with the company — with the contractors, as the case might be. Q. Is Mr. Hopkins in New York occasionally ^!r=rA. No ; Mr. Hopkins has been dead for some years. He died in 1879. -r - ^, Q. What ofSce did he hold ?— A. He was treasurer of the Central Pacific Bailroad Company. Q. Did Mr. Miller have charge of his books ? — A. I think Mr. Miller would know all about it. He and Mr. Miller were very intimate. They were old partners. The firm was Hopkins & Miller, grocery dealers, before he joined me. HOW THE STOCK WAS ISSUED. Q. Was that stock issued to the contractors under the contract, or was it issued to the subscribers and the money delivered to the con- tractors f — A. At first to subscribers who had paid money, but I think later it was delivered directly to the contractors. Q. Under the Crocker contract! — A. I think so. That will be all better known in San Francisco; but I think that was delivered to Mr. Crocker, and I think it was delivered later to the Contract and Finance Company. Q. Apart from the stock that was deliverable to the contractors un- der the various construction contracts, can you tell me whether any of the stock of the company has been subscribed for and taken by the pub- lic directly from the company I — A. On the first organization there was quite a good deal ; I do not know ; probably 100 subscribers ; I think not more. Hardly as many as that, 1 think. Q. Prior to the act of 1862 !— A. Yes, sir. 22 U. 8. PACIFIC R\n,WAY COMMrSStOS. Q. Representiug Iiow much stock T — A. I tliinlt it woulil ha all inside orn millioQ dollars. Q. Tlieii all tLo olber issues sinco tbe Orockei" contract Imvu bcon ii sued under coustnictioii contracts, I uiiUerstancl f— A. 1 think so, Th« foot of it ix, th^ro wiis no inarkot IVir 1h« stock for yeurs. Evtrybodj was nrmid (o touch it. Q. Whiit is tho yarliost printed i-eport of tbo Centml I'acifin I — A, I could not say, I do not think thoro was any priiitPrt report in the oart; ytars of tho construction. Q, Just look at the report for 1872 and see if rhat is iho earliost yoi rcincmbBp.— A. i liavo had very linletodn wilh tliese. Thoy a np in thB oIKce at San Francisco. This is ifi~'-i. Q. It is a reportof 187i', I Miink; isitnotT — A. Thero wasnonrinted reiwrt for iiniinihcr of years. This may be Ihc first one. •! should hav^ said it was a lilllo earlier thau that. ^^ (J. Von say thesi* aro made op at San Fi-anciMCo f — A. Yes, eir. Q. As to the imMliods of keeping the accounts and making tho staM meiits,was that done under yoar advice!— A. No; not ntall, I doniri think 1 was erer consalted about it nt nil. Q. Still, you became perfectly faruiliiir willi tbo methods of making the stntemenlBcoutftined in them, I suppose! —A. I peucrally look then over, buD I dc» mit i-xainine thusi'. rcpiiris vi'iv- iiiui:h. I li;ivo a man ex- amine thi-rn. ir llicrt^ is iiitv tiling' in- lliiiilis I w.iritd want lo liavo er- pUiirii-d (o nii', lir i>\[.l;iins 11. I ii-:ti| -ivi-r v.-iy liltio of th« n^portSi Mr. Miller mid .Mr. Stiiuronl and Mr. IIoiiIuiim, iiml many others then that havo bocii with mc since the urjfitni/,ulion of th<^ company, bav< ' each one his part to do. I have been tlie outside man always. I aiali all my inercantiUs busineHs. I m^ver go into the oflicH if I can help fl and 1 generally can. I do the ontside trading and attend tothogouenr out-side bnsiness. Q. Wore you cousultod, lor tnstBnoo, as to the mode of keepins a proQi niul Ions or income account, with reference to determtningqnestionstba might arise as to what was proper to credit to that actwint and wliaB was proper to charge to that account! — A. No: 1 do iml. liijid< tli«y would iisit mo anything about it. If tbey did, I should till {\\rm to keep their books iu their own way. I have always bei-u biie tin- Outx;lt- man Mint did not keep books, who eai<1 hokuewbowmueli Im owed and how much he had to pay it with. That is about all tho bookkeeping have ever done. KABNINGS OK OBNTKAL PAOIPIO. Q. Uo you know whether there is any priuted account of the earuingi of the (Jentrat Pauiflo Kaihyay prior to the Ktatcmeut^ iu tho report 0 18i3f — A. I think so, I think there is no trouble gutting itovery yea fVom tho coiumoneement of its operation. Yon can gE^t exactly wUai the road has earned and what it has cost to earn it. Q, I cat! attention to page 4a of tho report of 1873, which contains j statement of the net earnings, after deducting operatingexpenses, fnM llKIt to 1S71', amounting in all to $17,000,0(>l>.— A. 1 have no doub this is cornwt; but I do not know anything about it from any know edge of my own. Hut. 1 jim satiulleil it was correct. Q. My ipiesliou is, whetlier there is any printed statement coutaia ing an nccount tifthit iiiatlersto which those earnings were appliodi-- A. My ilnprc.HHiuii is tliat iu the early years there would bo no printer oecounl.'t: 1 think yon lau liud (liern nil in Ihe unice ol' the cumpaaj C0LLI8 P. HUNTINGTON. 23 bat I do not think there would beany printed accounts ; perhaps there are; I have no doubt but what those figures can all be verified in the ofBce. Q. The profit and loss account contained in the report for 1872 starts with a balance of $4,000,000^ and shows the result of transactions dur- ing that year, leaving you with a balance of profit of $7,433,000. — A. I have no doubt that is correct. Q. That 1 understand to be a statement that the actual profit made from the transactions stated in that income account indicates that the profits of the company for that year, confining yourself to these items, was the difference between the first ba>ance and the second balance — between the $4,000,000 and the $7,300,000 ?— A. Yes, sir 5 I presume that is so. Q. Have you any personal knowledge of the nature of the items charged against the earnings, and which appear in thisincomeaccountf — A. No ; I have never had anything to do with their book-keeping over there; the expenses here, what we paid for material and miscellaneous expenses, have gone into the memoranda for the different months, and then have all gone out and been distributed. MISCELLANEOUS AND LEGAL EXPENSES. Q. The account I refer to contains a charge for general and miscel- laneous expenses $233,272 ; in what book would the details of those ex* penses appear! — A. T do not know.. Q. That Mr. Miller could tell ust — A. Yes, sir; that would be in his department. And I have no doubt that he can explain it. Q. The same statement for this year, 1872, contains an item, ^' legal expenses, $63,678.10.'' Have you any knowledge of that item I — A. No; I have not Oovernor Stanford has attended to these matters in California, and I have attended to them here. They were always too mnch, I thought. Q. Do you know what the general character of the legal expenses daring the year 1872 wast — A. No; but then we have a multitude of legal counsel. We have to have, for the whole length of the road. If we kill a cow, tlie cow represents a certain sum and the legal expenses something more. Q. They do not charge $62,000 for cows in California, I suppose? — A. No ; but there are a great many of them. WHO THE COUNSEL WERE. Q. Will you please tell us the names of your principal counsel in 1872 1 — A. S. W. Sanderson, I think, was with us then. Q. Of San Francisco! — A. Yes, sir; and Mr. Kobinson. Q. Please give the full name! — A. I do not know that 1 can give Mr. Robinsons' name. Q. Of San Francisco f — A. Yes, sir ; S. W. Sanderson ; and llarvey Brown, I think, was with us then. And I guess S. M. Wilson anil Hall Macalister have been our general counsel for a long time. Mr. Storrs was counsel here, and then 1 had from time to time others. Q. Which Mr. Storrsf— A. James A. Storrs. Q. Was there counsel in Washington f — A. Yes, sir; we always had counsel there. Q. In 1862 who was counsel in Washington ? — A. Our principal man there was Kichard Franchot; and then we had others there, Hennr 24 U. 8. PACIFIC RAILWAY COMMISSION. Beard, I tliiuk. at Liiat time, anil Mr. Bliss, I tliiDk liis iiame was. We always liail quite a number io WasLingtoii. Q. Wlioftudilwl tholegaU'xpeiises! — A. I tbiuk Oovernor Stauford on tlio otbcr const, aud I iiaed to pay tbem here. Q. You paid tbein on whose audit — your own I — A, On my own. Q. Do yoiiknow where the vouchevs forthoseiteinsarctobefonndt — A. No; they would bein San f'rancisco, Isiipposc,if anywhere. There would not be Touchers for all, I do not suppose. Franchot always bad n great many expenses in Washington, and when he wanted some money I always used to give it to him. lie was a very lionorablo man, whom 1 bad always known bIuc«1 was a boy, and ho liadiiiy entire confidence, and there were a thousand things there to attend 1o. That is, there were many : I do uot say exactly a thousand. Q. Without vouchers, you mean I — A. Yea, sir. Well, I did not ask him for vouchers. By the (JnAlRMAN: Q. Whynotl — A. Wall, there are so many things that have to be paid; it is a dollar here and five dollars there, and it is almost impossi- ble to get vouchers. A little printing, aud advertising, aud messenger boys, and copying bills, back hire, hotel hills, and a great many things; ami I knew be would not pay out any money nnless it was proper. By Commissioner Anderson: Q. la there any one else to whom yon were in the habit of paying money without vouchers? — A. Ob, yea, sir; we have miscellaneous ac- counts. We alwaysdo have. I liclieve all oJflces have a miscellaneous account, as they call it. Q. 1 am referring now to legal expenses T— A. 1 suppose most all the offloes would have accounts of that kind ; I have always had. EICHAHD rEANflHOT AS COUNSEL IN WAsniNOTON. Q. I ask whether there was any other person than Mr. Franchot whom you remember as having been iu the habit of receiving money from you personally for legal expenses without voucliers T— A. I do not think tliere is ; not aa long as he lived; Mr. 81iorroIl succeeded Mr. Franchot. Q. now long did Mr. Franchot remain your counsel ! — A. Until he died. Q. In what year was that ! — A. I think it was in 1878, but I may be wrong; I should think it was in 1878, however. Q. Ilave yon any idea of the amonnt of anonal payments made to him which are not represented by vouchers t— A. No; I do not remem- ber at this time; it was very considerable. feahchot's fjaxaby. Q. And thatoccurred everyyear, or only occasionally! — A. TeB,8ir; about every year; General Franchot received $20,(>00 for his own services. ■ Q. Do you mean at one specific occasion ! — A. No ; we gave him for his own salary $20,000 a year. Q, Waa that payable monthly or payable whenever he wanted it I — A. Well, a« ho wanted italoug; generally there waa a little balance coming to him »t the end of the year, which was paid. COLLIS P. HUNTINGTON. 25 Q. In addition to this $20,000 a year, did lie also receive money from you for these items which you say are not susceptible of being verified by the vouchers! — A. Oh, yes, sir; when he said he wanted money for theae small expenses here, or he wanted a little money, I used to give it to him. LEGAL EXPENSES PAID WITHOUT VOUCHERS. (J. And he may have received from you $30,000 or $40,000 a year wiUiont voucher, then ? — A. I should think very likely ; in our large operations I should think so, in the important matters there in all the Departments and in Congress. We had to get men to explain a thou- sand things. A man who has not had the experience could hardly imagine the number of people that you have to explain the matters to. Q. Was he a practicing lawyer t — A. No, he was not ; I do not know whether he was educated as aiawyer or not ; I am inclined to think he was, though. I have known General Franchot ever since 1840. •Q. Do yon think the payments to him were included in that item of legal expenses or miscellaneous expenses ? — A. I think I generally had the item " Paid General Franchot for legal expenses ^ or " Miscellaneous exi>enses" ; something like that ] I think that was it in my memoranda that went out; I do not know just how they would distribute it, but they would have to follow that about as I had it, as they would not know any more than was on the memoranda. MB. SHEBBELL THE SUOOESSOJ& OF FBANOHOT. Q. What are the names of the gentlemen who succeeded him f — A. Mr. Sherrell. Q. Is he still your counsel t — A. He died here about two or three months ago. Q. Did he remain your counsel up to the time of his death ? — A. Yes, sir. Q. On substantially the same terms as General Franchot ! — A. Yes, sir ; he was living in Washington and was with General Franchot in the last years of his life. Mr. Frauchot's health failed and when Mr. Franchot died he took his place. Q. Has the same method been pursued, in regard to payments with- out vouchers, with Mr. Sherrell f — A. Yes, sir ; I very rarely go to Washington myself. Q. Is his salary the same, $20,000 a year!— A. No j he had $10,000. Q. Ten thousand a year f — A. Yes, sir, Q. Can you approximate the amounts paid to him annually without vouchers t — A. No, I can not; but it was considerable. Q. Probably as large as was paid to General Franchot f — A. I should think so. The last few years not so large, I should say. But along about the time Mr. Franchot left us and Mr. Sherrell took hold I think it was about the same. Our matters have been of less importance there for the last few years. Q. Beferring to the past five years, which is more within the scope of your positive recollection, is there any other person to whom you have been in the habit of paying moneys without vouchers for miscellaneous services t I mean of any amount. I do not refer to small transactions. — A. Wo always keep a little miscellaneous account in the office here, but tiiiey are not important. My matters here have been mostly for mate- rial and rails and locomotives, and a thousand and one things that coor^ into the building and operating of a railroad. . 8. PACIPIC RATLWAV COJDIISSION. Q. All paymeuts that ycra mabu for material niitl uatters nccdod for tbo Tiulroad you aniloubtedly piiy oh votiuLm-sf — A. Oli, yes, ttir. Q. Wlieu you pity you U'ceivu a vouelicrt — A. Vea, sir. Q. Aud yuu trutiKtuU tliat vuuulicr to LLo proper oCUcur in Sail Fran- cifico, nad tboru it is diMtribuled to tlic u(»;uunt to wliiuU it belongs t — A. YeB, sir. Q, Yon spKik of mtBuellauoous payniPiita. Cunfinirig your recoUec- tioii to tlH) last flri" yeara, is tliero any other pemon bi'sidiis Mr. Sherroll wlio Ims rucoiveil iiiotipy without voudiera ! — A. Nd; i do not think of any lit thii^ timn. lie lias attended to all these mii^c^dlivneouR matt^ro. I have generally handed hlin any money as lie has requested it. TUKOBy OF TUB OENERAI. DALANflE SHEET. Q. Will you please look at the general balance slioot in tlio report of IS72,uuduxplatti the theory on whicli it was luiwle up. — A. 1 do notknow roneli nbout the thoory of these aitconnts. I am not a Imokkeopcr. - liy the CnAiKSlAN : Q. (live us the practical siROVEMENTS AT OAICLAND POINT. Q. What is this expenditure at Oakland Point that you refer to f — A. We filled out there. We have a pier there that is about 11,000 feet long. It Kins out to deep water. The piles were deca^ying away, antl \?e are fiUiyg it in. It is an immense filling tbere of a mile, running right out into the bay. Oakland lies across the bay to San Francisco. We run around the bay from San Jos6 to Niles, and Oakland is oppo- site San Francisco. Q. Is Oakland inchided in the aided i)iirt of the Central Pacific f — A. No, sir; there was no ai to that time ! — A, I dit not think it does ; I am quite sure it does not. Q. What is tbeitem as given there t— A. Say t3.00ft,0(M)~»2,l)72,O0l). Q. In what other item of that balance-sheet wouUl the balance of that cost of construction be fouud I — A. It would not he, unless it is in the large coustraction account. Q. The general construction account f — A. Yes; it would be in that; I know there is more than that ; very much more. Was that in 1883 — the California and Oregi>n Company t The Oqairhan. $2,105,820.77, as appears iu the account of 1882. The Witness. That is, I think, from Ahamii or Iteddiug up. Q. Your impression is that the entry of this item, as a separate item in the general ledger balanoesbeet, commcnees when you began the construction from Redding north I— A. Yes, sir ( that is my impression. Q. And that the cost of the construction south of Ueddiug is included in the general construction of the company T— A. Yes, sir } I am quite sure that is so. OommissioDcr Anderson. Please compare the equipment in 1872 with the equipment in 1883. The Witness. This is 1884. The equipment is, say, $8,250,000. Q. I think that is 1SS5 you have, is it not! — A. Tliis is 1884; here is 1885 ; the equipment here is $8,250,000. Q. And in 1872 f — A. Equipment, &ve million and a half, or a little over. Q. Can yon toll us iu general terms what that dltference represents t —A. I suppose it is right. I thought iciraH considerably more than that'. Our equipment has changed its character almost entirely since 1S72. I think our largest engines were 10 by 24 cylinders; a good many 15 by 22 ; 18 by 24 now is about the smallest engine we use, and we have tbem M by 36. I think one of these mjichiues will weigh four times as much as, and will give more than four times the power of, tbo 15 by 23. Our petiple ordoretl Jifty at one time of 15 by 22, I did not buy them because I thought they were too light. book-keepino treatment op deteriorated htouk. Q. Is it your practice to sell tlio old stock, or to keep it for what it may be worth T — A. I do not know that we have ever sold any. I do not recollect that we have. 1 think we have sold Kome of the smaller engines to the light branch roads — other roads. I think we have. Q. Do yon know whether the practice, in keeping these equipment Bcconnts. is to leave all these old maehiues in at cost, or is any allow- fcnco made for their deterioration f — A, Ihere ought to be an altowanoe for deterioration. COLLIS P. HUNTINGTON. 29 Q. Do you knowjosa matter of factt — A. I do not know. But I know we have sold some. We sold some to the Southern Pacific of those small machines ; that is, on that part of the Southern Pacific running out from San Francisco. Of course, we had credit in the equipment account for them. Q. When sold you credited the exact amount you received to the equipment account ? — A. Yes, sir. Q. What do you do in regard to the decreased amount that you have on hand t Do you charge the difference between the cost price of the machines and the realized price? — A. When we buy one it is charged to the equipment account 5 and then whatever we sold an old one for, that amount is credited to the account. I know Sam Wilson, the mas- ter mechanic of the Southern Pacific, said our people cheated him on seven or eight. That was talk amongst the operators and different superintendents. Mr. Wilson had nine small engines sold to him, and he said our folks charged him about twice what they ought to. Q. Would not the result of that method be this : That if you bought five millions of equipment, and, in the course of a year, sold it for two and a half millions, that account would apparently owe your road two and a half millions and have no property on hand at all f — A. That would be the result, of course. They would be credited with their serv- ices, and what they bring would have to balance the item. Q. In other words, to get a true statement of the value, you should make allowance for the deterioration of the property on handf — A. There is no doubt of that. Q. In regard to the construction of your road at $131,000,000; is not that the exact cost taken from the contracts, without ever making any allowance for deterioration or depreciation of value f — A, I ^ould think likely that was so, taking it from one year to another. INCEEASED VALUE OF "SHOPS." Q. The next item is shops. Please compare the statement of 1885 with the statement of 1872. — A. In 1872, the item for shops appears to be $813,000, and machinery in shops $466,000. There are odd cents and dollars there. The item of shops in 1885 is $1,229,000, and tools in shops $1,164,000. Q. So that 1885, as compared with 1872, increased how much in those two items f — A. A little more then double. It was $2,400,000 against, say, $1,300,000. About double. Q. Have you any knowledge of what that increase represents! — A, Our shops in 1872 were ordinary railroad repair shops. Now we have shops where we make locomotives. We are putting up this year 36 very large locomotives. We have rolling mills and roll our own iron. We cast 100 wheels every day except Sundays. We make fish- plates and track-fasteners and spikes. In fact, we have now a large machine shop and rolling mills. I had supposed the difference would be very much larger than it is. Then we had simply repair shops, and bought all our locomotives and cars here. We have put up 10 cars a day tJiere in our shops. They are a different thing now from our old shops. Q. Where are these shops situated f— A. At Sacramento. Q. Are they within the aided portion of the road f — A. Yes, sir. Q. So that the Government lien, as you understand it^ applies to ttiemt — ^A. Yes, sir; I suppose we have the most perfect railroad shops in the United States, That is, the most extensive shops of any in we United States. . H. PACn-IC RMLWAV COMMISSION. REAL ES'CATK. IJ. Tlni iK'xt lU'iii is real estate. Will you compiiro tluit itum in 1885 wllli Urn Slum it«iii in 1»T2T— A. Kuul oxtato in I8T:J was 49fi8,0()0. lluil cslnlti in 1885 w.in tl,51(i,0()n. Q. Wliiit iliKts tliiit iiiiireaHO i"P|ircsuiiLf — A. Wiwire alwiiys Iitijinjj, alwn.va aflor it^al CNtatn. 1 lianlly know whi>i-e it is, lUl of it. But wo am buying in Qaklanil, and wo iHniglit in Saomiueiito, 1 am qiiitfl siiro. Oli, yea, sipj we bonglit vory largely ia Sacramento since then. (j, For raili-oad imqioseiit — A. For railroad piirpoeos; macUiuo and n^)>ivir uliops sit otlior (dticeH till along. We aro cidargiug all the time, and tlitno is a ideceol'rwil oslat+t to bo houKlit Lore and tliero for rights lit' way and otlior n»cs. That i(i!iri i^ not as lar^e ad I eupposcd it was. Q, Att to tlnit item, bow inuiib ol* it is »iibici;ti>leiw« oxt>\au\ viV-M Wxts'j B,xear in the aoooaut at all. Do you know why t — ^A. No, I do not. There was a sink- ing fund on all the bonds. The laws of California, 1 thiuk, require a sinking fund. Q . Do you know whether there is a list of bonds that have been bought, redeemed, and paid for! — A. No, I do not think there is. Oh, yes, sir; I can answer that. The land grant bonds have been redeemed. I suppose some $6,000,000 of them have been retired, and the State aid bonds have been redeemed and paid for. Q. Through the operation of the sinking funds ? — A. Yes, sir ; I sup- pose so: and the convertible bonds — a million and a half of converti- ble bonds — also have been redeemed. Q. Sinking fund No. 1 was for the convertible bonds. These have all been paid offf — A. Yes, sir^ paid off and canceled. Q. Do you remember what the amount of the issue was ? — A. A mill- ion and a half. Q. Sinking fund No. 2 for the redemption of the California State bonds f — A. State aid, they call them; those are paid off. Q. Have you a list of themf The Chairman. There is a very small balance here in 1885. A. I do not think they were all paid. I think I extended, or the com- pany did, $400,000 of them. That is my recollection now. I think there was $1,100,000 of them paid. I arranged to extend them; that 18, 1 did the negotiating to extend $500,000, and there were not so many extended. The company paid off, I think, all but $400,000. Q. Sinking fund No. 3, for the redemption of the first mortgage bonds of the company, series A, B, C, and D. Do you know anything about the management of that sinking fund ? — A. The company has it It would net all the requirements. Q. Who has charge of it f— A. The company. Q. What officer of the company ! — A, The president, I suppose. We, the board of directors — I think it is a matter that is handled by the board of directors. Of course the president of it is at the head. HOW DISPOSED OF. Q. Do you know how the sinking fund matter is arranged ; whether it 18 simply a book entry, or whether any officer has charge of the mat- ter, so as to receive the actual moneys required for that sinking fund . provision from the earnings of the company f — A. My recollection is that W. V. Huntington and Timothy Hopkins have control of it. When 1 was in California, some two or three years ago — ^it comes to me now — they were appointed a committee to examine every certain time — every six month«, I think it was — those securities and see that they were in plaec Q. Do you know into what securities the funds belonging to these dif- ferent sinking funds are invested ! — A. No, I do not. 1 think some of them are in the Southern Pacific ; perhaps most of them. Q. Have you ever examined these securities, to see whether these funds are all actually on hand t — A. No, I have not. Q. Can you not state more definitely who would be responsible for the production of these securities to make the sinking fund goodt — A, I coald not state it any diflferently from what I have, that it \^ \SaA>Q«i«A otimctora, tbe president being at the head. TJ. 8. PACIFIC RAILWAY COMMISSIOIf. Q. Do yon kTiow wUere the bonds are that boloug to the siukiiig fiiiHll — A. I eappose tliey are in the vaults of the company, or at least ill Homu safe deposit. They are pnt away. There is no qnuHtiou about tbut. Q. They shonld be in some safe deposit company in Oiilifoniiat — A. Either that or in the vaults of the company. Oar vaults are very se- cure, where we keep oar own treasoi-es. Q. Do you know whether any actual veiiQcation of tbeso sinking funds has been made by the ofQcers of the company within the past two yearsT — A. I did not see it doue. As well as I could know it without seeing it done, 1 know they hiive, because they have reported to me when I have beeu over there tiiat they had oxamiQed them. That is, Mr. W. v. Uaiitingtoii. I iiiqnircd of him about them, and lie said tiey were examined. Q. Is he a relative of yours ! — A, A nephew. tj. Is ho in Han Franeiscol — A. Yea, sir. Q. Does he come to New York occasionally T — A. Not ofceu. Q. Do you kuow whether any portion of these sinking ftiuds \s rep- resented by loans, either to the company itself or to the Oonstruotion Gompauyt — A. No. I 8hoald think very likely that the Pacific Im- provement Company hiwl some of the money. TCE PACIFIC IMPEOTEMENT COMPANY. Q. That the PaciQc Improvement Company had whati — A. Had some of the sinking-fund money. I snggest^d to our people, when I was there, that they take some of it (and they had some funds), and let the Pacific Improveoient Company have it,and put np collaterals; that that would make it look better. 1 1 would not be any better than though the company bad their paper for it. I did not see it done, but I thtuk that Is the way a i)orlioii of the thinking fund is arranged. Q. Do you know wli:it amount of the sinking fund is invested that i way t — A. I do not. Q. Is it not riuitc a largcHum of money, several millions of dollars t— A. i do not know how much it is. My recollection is that at that time it was in the neighborhood of $3,000,000. Q. Do you know what security the Central Pacific holds for the money so advanced t — \. No, I do not. There was an esplanstion of it at the time which satisfied me, but it is out of my mind. Uy the Chairman: Q. Who composed the Pacific Improvement Com]>auy t — A. Thatifl' au old company. 1 could not tell you all the stockholders. Ity Gommiseioner Anderson : Q. Tell us some of the principal stockholders f — A. The four men, [ think, have a majority of thii stock. That is, Mr. Hopkins, Mr. Stan*'-, ford, Mr. Crocker, and myself. Q. Winch of these bomln fur which these sinking funds are held, are prior in lien lo the lieu of the United States f— A. There is the West- ern Pacific, from San .losti to Sacramento, and then the series ABO, and down to J, I gucwH, on the line between Hacrameuto and Ogden. Q. Aiul the moneys in all the other sinking fund^, nxct^pt those yon have enumerated, are for tlie payment of bonds junior to the LTiiited States lion f — A. There is no sinking fund on that, except what ia in file United States Treasury. The San .Tuat\\iin has a sinking fund, but that ia small, aod it i« outside of the toad ft\deA ^i's ^.\i'i Vjtyce'romsjav. COLLIS P. HUNTINGTON. 33 Q. Your answer is that most of these sinking funds, other than those whieh I have enumerated, apply to bonds which belong to portions of the road ontside of that portion which is aided by the Government! — A. I do not understand your question. All the bonds have a sinking fond, bnt those npon the Western PaciOo and those that are called the Central Pacific, but in series A, B, G, and so on to J, are on tbe main line ; those and the Western Pacific. Q. And they arc prior to the Government lien f — A. Prior to the Gov- ernment lien. Q. And I he other sinking funds! — A. Are on roads that are not aided by the Government and on which the Government has no lien. UNITED STATES TEANSPOBTATION AND SINKING FUND. Q. After these sinking funds the next item I find is United States transportation and sinking fund, amounting to $9,251,000 T — A. Nine million two hundred and fifty one thousand dollars. Q« Have you a copy of the account making that balance up t — A. No, 1 have not. The Government owes us about $2,600,000, 1 believe, out- side of that. Q. Have you ever seen that account, stating that the amount of the Government sinking fund is $9,000,000 ? — A. No, I do not think I have. It may have passed before me in the ofi^ce. Q. The meaning of that entry, as I understand it, is that the total amount of credits due you for transportation from the Government and credited to your sinking fund at the date of that account, amounts to the sum named, $9,251,000t~A. That is as I understand it. That is an offset against what we owe the Government. Q. Do you know whether that entr>' agrees with the Government ac- count up to the same date? — A. I do not. The Government owes us $2,500,000, which they have not paid us. I suppose they will some time. CASH DUE FROM UNITED STATES. Q. The next item in this account is as follows : ^^Due from the United States in cash above all requirements of law, $744,000." — A. I have no doubt that this was right at the time. Q. What is the meaning of that? — A. It is due for business done over non-aided roads, as I understand it, and perhaps something else. We went to the Secretary of the Treasury to get the money, and he said it was a large item, and we had better get a legal decision of the courts, and we went to the Court of Claims. We sued the Government, and the Court of Claims decided unanimously that they pay us the money. Q. That is on the non-aided portion of the roadf — A. Yes, sir ; and whatever the item was. There were some other items. They went up to the Supreme Court then, and they decided it ; but I believe some man somewhere stated he doubted the constitutionality of the court's decision, and we have not got the money yet. "STOCKS AND BONDS." Q. The next item I find here is "Stocks and bonds." Will you give the amount of that, and tell us what that means f I presume it is stock and bonds owned by your road. — A. I do not know. I suppose they hsre fio many bonds that they have bought, probably, and there are biBi iMelTftble to a certain amount, and accounts. 3 P B 54 V. R. I-AOIFIC liAILWAY COMM18SI0S. Q. Do you iintlerfltand that tli»t incaiis stockv und l>ou()» ol' tbcir owu road, or stocks and l>ond.PDfiei Are your explanations as to that the same as those given for 18721- A. I have DO other to give. The same. eliev< that WHH paid; or were any dividends paid at all before thatt — A. think not. Q. It is marked dividend No, 1 f — A, Yes, sir. JJy Uie Chairman: Q. Your earnings, however, commouccd with 1805! — A. Yes, sir; think HO. By Commissioner Anderson : Q. According to your best impression, that is the Arst dividend I- A. Yes, sir; iu 1873. That is, according to my recollection. Uo I the time of the completion of the road we paid everything we coulcf gi onr hands on to complete il. Q. Was there another division of profits matle in some other WAf f^ A. Ko, 1 think not; t never had any. Q. By increasing the appiireut value of the stock t — A. Nojweu _^^ dill that. We organized first to go to the l^tate line, 1<')0 miles or n liCtl mure, and the stock was 88,500,000, and t hoii wc condnded we would bnU on to the Big B"ud of the Truckee, and more if wo couhl, and we madi it9JO,000,lKH»; and when wo got there we made up our mind wowonU go to Salt Luke, or as muiili farther as we eouhl, and, with some roodi iu California wo made it ij UH),000,0OO. That was less per mile of road than the «8,500,ooo. ^ leoai, kxpknbks fur 1874. It JST4 I rind legal expenses ft*4,00«, I tUiuk it is. Will yoa » t C&e ttgtirea right T — A. lii;;\ity U»vee \\iovwa\iA OYvt^ V\v«.{iA^%!DJ ptfr» doiliu-H. COLLIS P. HUNTINGTON. 35 Q. Aud i>ortious of that, a8 far as you know, were always paid with- out vouchers ? — A. I should say so. I think that is true in every year. Q. And yoa can give us no other information as to the place where we can find the detailed payments except to refer us to the books in California f — A. No, we have nothing here. I have nothing here, I am satisfied that they will have nothing for those amounts that I paid. They will have nothing except my memorandum that I paid so much. Q. A letter of instruction from you to charge so much to that ac- ooantf — ^A. To charge it to profit and loss, or to charge it to legal and miscellaneous expenses, I think, is the general way I put it. Q. Was that instruction given by you more than once a year, or simply once a year for the purpose of making up the books ? — A. I think I used to send out a memorandum every month of what had been paid; I did not want to have as much as a year's business accumulate in my office, and my recollection is that I used to send out every month. Commissioner Andbbson. Certainly, as to material ; but I am speak- ing of this item. The Witness. As to any money that I paid. Q. Then we would probably be able to get twelve items showing the distribution of these expenses every year! — A. 1 should think so, and still you might find them more condensed ; Mr. Franchot and Mr. Sher- rell used to get the money, and at the end of the year I would settle up and pay them whatever was due ; but the people in San Francisco can explain it better than 1 can. They know more about the books. As I said, I do not pretend to know anything about book-keeping. By the Chairman : Q. If the<(invouched accounts do not appear anywhere, how are we to find themf — A. I do not know; I do not know the necessity of it, as the commission does ; but I kept the accounts just as I should my own accounts. I was satisfied that they were all right, and so wrote them down. Q. What would the unvonched accounts amount to every year f — ^A. They are considerable some years ; some years a great deal more than any you have got there yet. .Q. About what would they amount tot — A. I do not know; our business has been very large; I should not wonder if it would roll up to a couple of hundred thousand dollars a year, some years. You see there is a lot of commissions and things to be done. Q. Were all the items small items ? — ^A. I do not know. I used to give money to General Franchot, when he said, <^ I have got to have a certain sum." He had my confidence, and I would hand it to him. PAYING $5,000 WITHOUT A VOUCHER. Q. Would you pay a sum of $5,000 without taking a voucher or hav- ing an account for it f — ^A. Oh, yes. Q. Without knowing where it went f — A. That is, I would know it was right if I gave it to General Franchot; I would know it was the proper thing to do. Q. Would you know to whom or how it was expended ? — A. No. Q. Would you have no knowledge of it!— A. There were certain things to be done, and General Franchot, as I said, I had always known; he was of the strictest integrity, and as pure a man as ever lived ; and when he said to me^ << I want $10,000," I knew it was proper to let him have it, and I let bun have it. mM 36 U. S. PACIFIC KAILWAY COMMISSION. Q. Without ever knowing where it went or how it was paid t — A. Yes, sir ; that is the right way to do business, in my opinion ; I have been doing business over fifty years. My theory is the old theory to — Tmst all in all Or trust not at all, as the old poet says, and I have always acted on that. Mark Hopkins has handled hundreds of millions of dollars that he and I were inter- ested in together, and I never asked him to show a figure. Commissioner Anderson. That was not your custom with other items of expenditure, however ; for instance, in the purchase of rails t The Witness. No, certainly not. I always had them bring a bill in and very carefully looked it over, and I thought that was the way to do that. I was very careful to look it over and file it away. '< EVERYBODY WANTS EVERYTHING EXPLAINED." Q. How do you distinguish between your way in purchasing rails and in dealing with your solicitor t — A. I could not explain it, as I know of. But if a man will go to Washington and stay as I did for a gre&t many years he will find that everybody is afraid. I have been in Washing- ton for several years looking on, and everybody wants everything ex- plained. There are a great many men I could not get to, and General Franchot could not. By Commissioner Anderson : Q. What was he engaged to do ! — A. He was engaged to attend to our business, to the best of his ability. Q. To your business with whom t — A. With everybody; with all the Departments and with Congress. 1 know, and probably ypu do, and perhaps it would be no harm in stating it Commissioner Anderson. None at all. The Witness. No harm in stating that men go to Washington, and I will say it without any mental reservation, that I do not believe Gen- eral Franchot — I know 1 never did — gave a man money or tried to influence a man in his vote for money; but there are lots of men in Congress I cannot talk to at all. By the Chairman : Q. On what subject t — A. You cannot get near them, and they are afraid. explanation of pranchot's business. By Commissioner Anderson : Q. Why should they need money ? — A. They do not need money. Q, Why should Franchot need money! — A. Here is Eichard Eoe^ who represents a certain district, and you cannot get near him, and he is afraid if he votes for my Goat Island bill, which I wanted, that it will hurt him in his constituency. You can send to his constituents and get John Doe, and he will tell him that is just what is wanted by his constita- ency. Q. W'ho will get the money then, in the story you have told ust — A. John Doe would get it ; not Eichard Roe that had the vote. I do not know this. This is mere surmise. Q. Would not the man that gives the money to John Doe say to him, <'Tell me what kind of a talk you had with Eichard Boe^f — ^A. No; he will explain the matter to him and tell him wherein it is to tke pab* COLLIS P. HUNTINGTON. 37 lie interest, and convince him in tbo first place that it is right ; and then lie can sit down, as a man can with his chnm and acquaintance, and say, ** Here, you do not understand this. I understand all about it. Now, 1 want to have you do it.'^ Q. Were not Pranchot's requirements for moniey larger while Con- gress was in session than when it was not in session ? — A. I should think so, because we have all our printing to do, and much of our busi- ness was done while Oongress was in session. There are a thousand little things that had to be paid for while Congress was in session, which, to a certain extent, would die out when Congress left. I do not believe that General Franchot ever used a dollar in his life improperly, for 1 knew the man as a beautiful, clean man. He never used a dollar in his life that the law, in its most sensitive sense, would not bear him out in. Q. Can you give us an approximate statement of the whole amount of money used in this way from 1872 down to General Franchot's death ! — A. No ; I could not, now. By the Chaibman : Q. Let me inquire under this act (and it is a proposition that comes in here) whether any of this money that you have spoken of in the un- vouched items was used, or whether other valuablQ considerations were given, or any other act or thing done, for the purpose of infiuenciug leg- islation t— A. Will you repeat that question ! Q. I follow the words of the act only. There is a subject of inquiry given to us ; whether any of the sums named by you were used, or whether there was any other valuableHConsideration given, or any act or thing done by any agent of yours, in the direction that you have named under these nnvoucbed items, for the purpose of influencing legislation ? — A. No farther than to explain questions and show that it was a right thing to do, and more in the interest of the public than it was in the interest of the company. By Commissioner Anderson : Q. How could Mr. Franchot personally earn $30,000 or $40,000 a year in explaining things to members of Congress f — A. He had to get help. He had lots of attorneys to help him. Q. Whom did he have f —A. I never asked him. Q. How do you know he had ! — A. Because he told me so. He said "For these explanations I have to pay out a little here and a little there, and that aggregates a good deal." Q. Would that satisfy you without the names of the persons em- ployed by him t — A. Certainly. Q. Are you sure that was all he said in explanation of the use of his money f — A. Yes, sir. By the Chairman : Q. Whatdoyouknowastothecostof the explanation?— A. I did not care anything about it. There are certain things that you have to ex- plain, and you have to educate the people, and you frequently have to go to the newspapers to explain the thing. INFLUENCING LEGISLATION. Q. How did you educate the direction of legislation in Washington in that regard t — ^A. For instance, we wanted Goat Island, and they said tliat was- very valuable to the Government; and we wanted to explain toeveiybody that that was not of any value to the G^verum^ut — ^\9Vi\^Vi 38 ir. S. PACIP'IC RAILWAY COMMISSION. it wiiM not aud in uol— aud that it wjib oC viiluo to Uiu nvUroiid com|iuiiy, and tbat it wii« iM-tlcr for 8au Fmucifico to hiivo the wont end of the ratlroiid line upon a rock, wlipre theru was w»tur nevitrul futbonis deep, OD the BJda toward Han Fraucisco, than il was to bu built up and stand ou piles that were in 211 f«et of water, whidi would be oatL-n oiT in time by the teredo, and have to be removed every little while. We Iiavo had neveral hundred feet loHt nt like Hlips. We bud to explain that the island was no good to aiiybod.v but the Pacific Railroad. OoiumisHiunor ANDKltHON. A sort of common-Hdiool fund ! The WrrNKSS. Ve«, sir. Hy tbeCllAiUMAN: Q. How did you measure the cost of the explanation T What did it cost yon T — A. Tlie same as we would when we go into court. We have to hire an attnrne.v, and we give him about what he asks, liy Couiniissiouer Anderson ; Q. Do you!— A. We do. "MORAL INFLUKNCr." IN rnitllT AND CO?iaRESS. hy the Chairman: Q, Yon were not iu court at Wushin;;tun T— A. Yes, sir; just about the Kiime. Yon have to explain. Now, this committee can go and build three or four ihousand n)iles of railroad, and Ihcy will attack yoa from every direction, and you have got tt^'xplain, and you have to pay for the cxplanulion. Not lo buy voles, but to explain and briug inflii- euce — moral inHueiiee — to bear. There is no question about that. Q. In what direclion do .vou spend money to bring moral iutlncntte t — A. Vou have to send for parties that can explain it. One man can- not divide himself into four hundred parts and explain iL Hy Commissioner Anderson: Q. In addition to explainiog with words, do you not 8up]>08e they explain with champagne and expensive dinners t — A. Very likely. I never jjave a dinner in Washington. (J. I am talking aliout the use made ofycnrmonej'. Wao not a great deal of it spent in ciKiira and ilnim]in|,'iie dinners t — A, I think so. Kot' so mncli, but pcrliaiJH some i.f ii. wjim, |>i {;rl nduic able inau to sit down and really ex|)liiiii in tlie br\|iliiHi llie pnr■l■lla^^^ by you of the stoeks and bonds of any olhei' road, or the pavnierit of nubscriptions by any one T — A. No. By the CoAlRMAN : Q. Will you give us one illustration of the thing practically carried out, t>y which an explanation was made to some one iu order to secure legislation f — A. I suppose half the members of Congress hod to be ex-. ])lained to. Q. Will viui (•" through anyone iimtaucet — A, 1 have sat down and exphiiiiiMl I.I ih<-iu myself. Q. Wliiit dill Villi pay t — A. I did not pay anytbing, iK'canse I did it directly. There was nothing for niu to pay. I did not get anythiug for uiy lime ; that is, nothing but what I ought to have. Q. Somebody bad to be paid. Now, how do they do f — A. I suppose tberBeiiH for ttomebody as 1 say. Mr. Krunchot says, "It costs a great (/ejutngtACIFlC RAIUVAV COMMISSION. ^^H The Witness. That is easy of explunutioii. I ciinuot uxpluiu it,l>Ht tbe records will dhow it. I can get it for you by day after to-innrniw, if you wish to have me. Commissioner Amdebson. Yes, sir. Hy tbe Cuaieman : Q. Will you also give an explanation of the item of nccounls paya- ble that aiijicar id the same year T — A. Tbe bonds T Q. Yes. — A. Yes, sir. I.EA8K OF OENTBAL PACIFIC TO SOUTHERN PACIFIC. liy Commissioner Andgbson: i).. N\'cre you a party to the a^eement for the lea«e of the Oeotral Pacittu to the Southern Pacific T — A. Yes; I was not in California. Q. llow did that umtter come upl — A. It haa been my view for a gootl mauy years that there ought not to bo more than three or four transport at iua companies in Ibe United States. There is a great econ- omy in working them. In fact, it would be better, I think, if there was but one tmusportation company in tbe United States. It would serve tbe people a great deal better and do business cbeajier. Ily tbeCHAIEMAN: CJ. It would do away with tbe old theory of competition beingtbe life of trade 1 — A. Thnt competition is killing, and it compels them to take alt they can get. In the long bau) you have to do it frequently with a little profit on train expenses, »nd you have to make it up where you can. ]ly Commissioner Ahdebson: Q. That is the way tbe subject came up I — A. Yes, sir. Therefore I thought if we should get all our companies together and get as many as possible to come in with us, wo could operate all under ouc company. That is tbe way we started with the Southern Pacific. As we built a road, we let that company take it. Q. What I want to get at particularly is why the Southern PociHc Oumpauy was selected as the lessee, and tbe change made from the prior order of things when the Central was a lessee of a portion. — A. The Souttierii Pacific got to be a greater company, and itlouked a little like the tail wagging the dog for tbe 8Ut) miles of road to run the 4,00U or 5,000 miles of road. Q. The Souliieru PaciQc is a Kentucky corporation ! — A. It is. Q. Mr, Stanford is tbe president of the Southern PaciHot — A. Yes, sir. Q. And he is also the president of the Central t — A. Yes, sir. ii. That wassoat the time the lease wasmade.wiut it not r — A. Itbink so ; I am not certain ; yes, sir, I am quite sure ; be has always beeu president of the Centnil, and 1 think he is of tlie Houthern. THE OPPICEES COMMON lO BOTH EOAD8. Q. What other officers iire common to both companies 1 — A. I thiuk they are mostly iibont tbe same. I could give yon the names of bolb boards without any trouble, that is in my ofiBce. Q. Who are the jiriucipal aud directing men In both companies 1 — A. Mr. Stanford and Mr. Orookor and Mr. Hopkins and I myself. I have aoBiething to «ay. COLLIS P, HUNTlNOTOK. 41 Q, You four together own a very large atnouut of the 8iock of the Soathem Pacific t — A. Yes, sir. There are a great many stockholders of the Southern Pacific ; it is uo more scattered than the Geutral, that I know of, but there are a great many stockholders iu the Southern Pacific. FBEiaHT BATES. Q. At the time when this lease was made who had charge of the di- rection of the arrangements that were made for the division of freight rates between the two roads f — A. The oi)eratiDg department, Mr. Town at the head of it i he is our general manager. Q. Under whose direction would he fix his rates ? — A. Naturally, un- der the president, I suppose. But Mr. Town has been with us a loug time, and he is a very able railroad man and knows more about oper- -ating roads than any of us, and we leave that almost entirely to him. Q. Has the division between the Southern Pacific and the Oentral Pacific, since the lease was made, been made on the basis of a ^^ pool- ing" arrangement, or has it been made with reference to the actual freight and traffic going over each road t — A. There is no pool, I think ; I think each road gets its earnings — I am quite sure of that; that is, they are kept separate, so that you can tell just what one road has earned and just what the other road has earned all through. Q. Describe how the Southern Pacific makes its connection with the eastern portion of the United States. — A. Over the Oentral Pacific. BOUTB OP THE SOUTHEBN PACIFIC. Q. No ; how does the Southern Pacific make its connection with the eastern jJortion of the country ! — A. They come to New Orleans with the rail and then they connect with the Southern Development Com- pany steamers to New York. Q. The Huntington line! — A. No; the Huntington line runs from Newport News to Liverpool. Q. What is the name of the line that was purchased so as to make that connection f Mr. Tweed. The Morgan line. A. Yes, sir ; that is a portion of the Southern Pacific system. Q. Can you tell us anything about the proportion of through trade that is carried over the Southern Pacific as compared with what goes over the Central f — A. No. That is easily ascertained. On the tide- water, as we say, we take nearly all of it. We are the shortest line, equating water against the rail. The line by New Orleans is some 400 miles the shortlist. When we get west of the Alleghanies we do not compete at all. That comes through the Atchison and Central Pacific. On the tide- water we carry most all of it by way of New Orleans. Q. Whom do you mean by " we ! " — A. The Southern Pacific. I am interested in the railroad from Newport News to New Orleans, but we do not do anything in that way. By the Chaibman : Q. Speaking of the gentlemen you have named, have they, with yourself, the controlling interest in the Southern Pacific ? — A. Yes, sir. The Pierce estate and we four have a majority. I think we four have ; 1 won't be positive about that. By Commissioner Anderson : Q. This fact that so much of the freight goes around by New Orleans has, of course, grown up daring the last three or four ^eata^ — ^. X«^^ Mr; since tbe parcbase oftbe Morgan Company. I. PACIFIC BAir.WAY COMMISSION, '.NCEUNINO TUR DIVKKMK'N OK PltOFtTS, (j. Hon not that liud the effect to decrease the enrutii^a of the Geii- trnl Puciflc in its through basineas 1 — A. Of course, to a certain extent when another road ik bnilt, it divides the iiicreaBe. As a matter of neccKsity the Northern Pacilic and the Atchison hare to divide. Q. I iiDderstand that ordinary competing lines will decrease the prolits, but 1 call your attcntfon to a diversion of profits made to a road ill which the oflicers are in both companies. — A. We do not have any- thing to do with Ihe eontrolliug of freight, (j. Nothing whatever T — A. Nothing whatever. The Union Pacific and Central Pacific have an office on the comer of Ueudc and Broad- way, und they work for freight. Mr. Ilawley is the agent for the South- em line. They work for freight. Noboid you submit the questioD of lease of the Central Pacific to the Soutllfni Pacific fo your stoekhoIdersT — A, I do not know. Do you knovf, Mr. Tweodt Mr. Tweed. No, CHARLES FRANCIS ADAMS 43 CONGRESS NOT CONSULTED AS TO LEASE. Q. Did yoQ sabinit a proposition to Congress or to the United States Go^mment that you were going to make sach a lease f — A. I do not think we did. Q. Yon onght to know. — A. I am quite snre we did not There is nothing in the statute that requires it. I do not think there is; Mr. Tweed is the man for that Q. So that, without consultation with your other stockholders or without notice to the United States, you leased the Central Pacific to the Soathern Pacific f — A. Yes, sir. Q. The same interest that controls the Central Pacific controls the Soathern Pacific? — ^A. Yes, sir. The Commission then adjourned to Thursday, April 28^ 1887, at 10 a. m. No. 10 Wall Street, New York, Tkvrsday, April 28, 1887. The Commission met pursuant to adjournment. Present: Commissioner Patterson (chairman) and Commissioner An- derson. GHAELES FEANCIS ADAMS, being duly sworn and examined, testified as follows: By Commissioner Anderson : Question. You are at present the president of the Union Pacific sys- tem of railroads t — Answer. I am. Q. How long have you held that oflSce ? — A. I have held that ofiBce since the 17th of June, 1884; three years in June. Q. What connection with the railway department had you prior to that timet — A. My recollection is that I had been director fourteen or sixteen months before that. Previously, I was for one year a Goveru- ment director of the road. A member of the board of Government directors. HISTORY OF CONNECTION WITH UNION PACIFIC. ' Q. So that your first connection with the road began when ?— A. If I recollect right, it began at the annual election in March, 1883. Pos- sibly 1882. Q. As Government director f — A. No; I was Government director in 1878 and 1879 ] one year. Q. Between 1879 and when you were elected general director had you any connection with the road f — A. None whatever. Q. Were you a stockholder ! — A. A part of the time. Q. From what period can you say that you are familiar with the gen- eral affairs and internal business of this corporation ! — A. Really not qntil a short time before 1 became president, exactly three years ago at this time. I was called on, as a director, by the other directors to take an active part in the management. Complications then arose which caused me to be chosen president about six weeks afterwards. But prior to the let of May, 1884, 1 had very slight lamiliarity with the af- fBin of the company. U. 8. PACIFIC RAILWAY COMMISSION. y. Wei-u you 11 uicmbiT ol' tbo vuiiiiiiitU'CK i>f tlio buuiil ui direc- tion T — A. 1 was u mcralitr of oiio «1 llie n-Rular cotuuiillcoH ol' tlin board of diroctiou, but tb« work tliut cniiie bot'oro tbat coiniiiittvi- was nominal. « Q. Then your inllmivte acqniiintance with its affairs d*t« from lUo tiiiio you became presidentT — A. May, 1884; tlir«o yeurs ago nt tliis time. Q. Since that period have yon examined very cIokcI^- into the Rffairs of tbp whole system t — A. Very closely, indeed, cial affairs of th's corporation relating to its hiBtory anterior to the [wriod when you were elected president! — A. Never, except incident- ally. Q, In what particulars have you examined the subject yourselft — A. Its various lines, its connection with the Government, and its indebted- nesH to the Government, and the hest ways of dealing with these ques- tions. KANSAS PACIFIC CONSOLIDATION. Q. Ilaveyou examined peisoually theniatterof theconsolidaliouof the Kamnas Pacific with the Union Paciflc I — A. Never; I only have looked into it incidentally. I have accepted it as a thing which binl t^keu place three years or four years before I becamopresident, audit was my business t(p manage tbe consolidated road and not to examine into the history of tbe consolidation. I had to look into it to a certain extent in connection with some questions which arose in tbe State of Kansan, but 1 never had occasion to investigate it thoroughly. Q. Uavo you cxumiiicd it with reference to tbe question whether the corporation had a cause of mition agiiinat any persons by reason of matters connected with that consolidation 1— A. I have. Q. You have examined it in that point of view f — A. I have exandned it in that point of view, Q. lu relation to claims against persons individually, or in relation to claims generally! — A. There were stories that reached my ear, and charges were made against certain persons, especially Mr. Gould, who was then on the direction. aii.'S'a CHARLES FRANCIS ADAMS. 45 looked iuto, especially their financial quest ions and questious connected with their construction, to a greater or less extent. Enough to satisfy me. . BRANCH LINES. Q. You say some of them. Will you please name which of these branch lines you have examined into particularly f — A. The iirst one I looked into was t4ie Nevada Central. I then looked somewhat into the Denver and Sonth Park and Oregon Short Line and the Omaha and Be- pablican Valley. I may say, generally, that I looked into all of them. Q. Did you make this examination mainly with reference to ascer- taining whether these branches were a source of revenue or assistance to the parent line, or did you make it for the purpose of ascertaining whether the Union Pacific had claims against individuals by reason of circamstances connected with the origin of the branch lines t — A. 1 may say, generally, covering all those grounds, to a greater or less extent. Q. Which of these branch lines which form a part of your system' have a separate organization f — A. They all have separate organiza- tions. Q. Those that are connected with your company, as well as those in which you merely have an interest in the stock f — A. Yes. It arises out of the peculiarity of the charter of the Union Pacific. Nothing can be consolidatetl with the original Union Pacific except the through lines of which the present Union Pacific is formed. That is, the Kan sas Pacific, the Denver Pacific, and the old Union Pacific. That con- solidation was provided for in the original acts. Everything else is outside, and under a separate organization. Q. Is there anything to prevent the Union Pacific building a branch road, just as it would build sidings or side tracks! — A. I do not under- stand that the Union Pacific can build a foot of road under its charter, strictly. It is a remarkably narrow charter, and never ought to have been passed in so narrow a form. Q. You think, then^ that it would bo restricted from, for instance, connecting a gravel pit half a mile from the main road? — A. No ; that is too nan'ow. I am speaking of the construction of branch lines. We have some forty organizations of which I am president, I think. I never counted them. SYSTEM OF OKGANIZATION. Q. What is the system of organization — a president and board of directors f — A. President and board of directors, the regular organiza- tion. Q. Bonds and stocks f — A. Some of them have bonds and stocks, and some have stocks. They are of all sorts. I could not undertake to enumerate them at this time. Of course we will be ready to submit to yoQ at any moment a schedule. Q. Do I understand you to say you are president of all those f— A. If I am not, I ought to be. The intention is I should be president of them all. Q. Of a]] the organizations? — A. Of all the organizations. Q. Are the directors selected from directors of the Union Pacific! — A. As a rule, bat we, of course, comply with the laws in the dififereut States, &c., which prescribe sometimes that directors should bo citi- zens of the Htntcs. pacific: kailway commission, accounts op bbakoh links. Q. Wlieie are tlie accounts and Iiow aro the iiccuuiits uf those oepar- ato bmnulies kept f — A. Thoy aro kept at Omatiu, aiul they are kept in Q. Have you a complete tranHcript of the bookn in Boston T — A. I do uol know ; you will bavo to ask the comptroller. Q. Pk'iwo give the eoinptroller'a name. — A. Oliver W. Mink. (j. How long has he been with your cumpaoy 1 — A. lie haa been with it mauy years, long before J ha< and the business to the^o mioiag camps up on the mountains. (j. Are there any settlements of any magnitude ou the line of the road 1 — A. Oh, yes ; the road doi's a bnslnt^'ss. Tlie report will t«ll. It IB increasing rapidly now. A million tiud a half, I think it was, laat year. Q. A mdlion nod a half gross earnings 1 — A. I think so. Q. What is the annual deficit or excess of operating expenses over the groHs earnings, approximately t— A. About lOOjOOO last year. FUTURE OF DENTEB AND SOUTH PARK. Q. That is operating expenses alone T — A. Thiit is what it was. It failed to pay its operating expenses and taxes by about $00,(100. Q. Is there anything iu the business that that road is doing that you can tell ns of which causes you to expect that it will improve in the future in any way, so as to be an advantage to the Union I'aciflcl — A. In the ups and downs of railroad property, and especially in a region like Colorado, I should not consider the future of that road in auy way hopeless. (j. Js there anything connected with the special region that the rood goes through that can give you reason to believe that itH opfration will be more imditable iu the future T — A, Yt-s; mining cumpaiiitui, cBpe- tmJ/j; arc subject lo iipn and downs. If tht-y strike u good mine any- trhere ou tlw road, or dcv'olop a inineTivV regvo\\,\t-«w\\4 u.^'osk, NJam ^atJi Park at once to pick up. CHABLES FRANCIS ADAM8. 49 Q. Is there auy thing else that can be looked forward to as develop- ment for agricaltaral purposes f — A. Oh, no ; nothing whatever. It is purely a mineral road. Q. It IS based solely on the expectation ot future mineral discover- ies T — A. Yes ; sach in the fatare as there have been in the past. Q. In regard to this traffic that yon actually do over that road in car- rying men and material, are the persons that travel on that road mainly persons who use it for local purposes or only a short portion of the Un- ion Pacific, or do they go over the whole length of the Union Pacific in going to and fro T — A. It gives us a very large control of what is called Colorado business, from Omaha to Leadville and beyond. Q. Will your books show, so that we can discriminate as to the busi- ness of that road, how much of it is of benefit to the Union Pacific proper? — ^A. Oh, yes. Q. So that we can divide! — A. Yes; I have had those tables made cot repeatedly, in order to enable me to judge. Q. And Mr. Mink can give those figures? — A. Our accounting de- partment will give them. We have gone into the question frequently, in order to ascertain whether our branch system was a burden to us or DOf. Q. What is your personal judgment in regard to this particular branch ? — A. For two years it has been a burden to us. CON8IDSBATION GIVEN FOB DENTEB AND SOUTH PABK. Q. Have you told us all that yon know or were able to find out in re- gard to the circumstances under which the Union Pacific became the owner of this branch ? — A. Substantially. Q. Have you any personal knowledge whatever as to the price paid by Mr. Gould to Mr. Evans before the transfer to the Union Pacific^ or what was agreed to be p»id ? — A. I knew it, but it has escaped my memory, like many things connected with the road. I knew it exant^r at one time, but whether it was tlOO a share or tl50 or t200 a shasvl could now say. I should have to look the figures up and asoertaiik. Q. Do you know whether the transaction between Mr. Gknild aa»^ Governor Evans embraced any other subjects than the translcr rtf xLif branch road, at the same time? — A. I think not. Q. Do you know whether Governor Evans received thecntiie mmsK- eration which was paid by the Union Pacific ? — A. I have bp dmi'^c iv^ did. Q. You know nothing i>ersonally of it ? — A. I know BODal whatever about it. Q. Do yon know whether the consideration was paid ■ stock of the Union Pacific, or other securities ? — A. It not paid in stock of the Union Pacific. I have everv it was paid in money. Q. Do you know to what account that payi the Union Pacific books ? Would it be to ^( A. Oh, no ; to investment account. We have oonnt of $33,000,000, have we not, Mr. Mr. MiiVK. Yes, sir. Q. What year was that purchase ?— A. I it not, Mr. Mink? ^Ir. MnvK. In 1881. iP9 I V. 8. PACIFIC RAILWAY COMMISSION. stilted ill the reports; yuu will lliid it Itiore. OWNEBSHIP OF STOCK AND BONDS. (j. 1 iioticuiD the statement in the report of 1884, tbattlie Union I'a- citlc has aoquired titlu to only half of the bonond8 the purchase was madeT— A. X cannot now ; I should have to look. Q. What is the present status in regard to these Imnds, the state- ment being that then; are $4,GO0,O00 in all, aii/1 that the Union Fanifla owns$:2,Ghg,000T— A. Tbat would make itexactly; there are $1,800,000 Iwnds, a first mortgage on the line belonging to the original jiroperty which Govenior Evans built; that is, the 150 miles; loofi'set these tberv are $1,800,01J0 of the stibscquent consolidated mortgage bonds which are in our treasury ; tho other $:3,6O0,OO0, making $4,400,000 in all, ar« * subject to issue at any time. Q. Then I understand that there is no outstanding lien against this branch, except $1,800,000 T— A. That is all. lint there are $70,000 or. $80,000 of the consolidated bonds which we subsequently paid oat tw< Westinghonse on a contract for air-brakes. He agreed to take his pay ill these bonds, lie took them to tho extent of $70,000 or $80,000.. Those are outstanding and in Westinghouse's hands. Tbe re»t of thft consolidated bonds are all in our treasury. Mr. John F. Dillon. 1 understand this, and can make a suggestion about it. Tbe Witness. Judge Dillon knows more about it than I do. Mr. John F. Dlllon. I think the first mortgage was $1,800,000 at 7 per cent., covering about 150 miles of road, and that the extensions were built with tbe consolidated mortgage. Q. Ami the bonds are ontstandingl — A. No; tbe bonds are not out> standing of the consolidated mortgage. Tbey are in our treasury. Mr. .John F. Dillon. Tbey have been issued. The Witness. They have been issnod, iiud we have taken them. Q. I'oii otru (Item 1 — A. The distinction 1 drew in tliis ease was ba vea bauds ia the bauds of the outside v«bV\c, vi\i\tV \ ca\\^»m&&^^« ' laarLetvd ami nre afloat, and bonds w\\\c\\\>avo\>c;fctt\*sn,ci«a\« r ttvtusary. CHARLES FRANCIS ADAMS. 51 BRANCHES OF DENVER AND SOUTH PARK. Q. Yoa say that there have been two branches of this branch con- stracted since you acqaired it I — A. Yes. Q. Name them. — A. One is over the Breckenridge Pass to Leadvilie, and the other from Baena Yista, soathwesterly to Gannison, with a branch to Baldwin ; to the coal mines at Baldwin. Q. What is the length of these branches, respectively I — A. About 100 miles. Q. Your total mileage is 320! — ^A. 170 miles. Q. Which was built first ? — A. If I recollect right, the branch over Breckinridge Pass. Q. When I — A. I could not tell you. Both were finished before I took charge. There has not been any road built since I took charge. Q. Is the object of this branch a mineral object ! — A. Entirely. They were the branches that gave us our main business. They were neces- sary to give OS any business. Q- Please state what was done in regard to the consolidated bonds issued on this new construction. — A. They were issued and sold to the Union Pacific, as I understand it. They are in the treasury of the Union Pacific. All the bonds and stock were issued to the Union Pacific in payment for construction. • MEDHOD OF CONSTRUCTION OF BRANCH LINES. Q. That is to say, this Denver and South Park branch procured the CTnion Pacific to do the construction, and paid for the construction by issuing its bonds to the Union Pacific ? — ^A. Practically that was the way. Q. And the Union Pacific now holds those bonds I — A. Now holds those bonds. Q. As a part of its investments ?-rA. Yes. Q. Do you know, in fact, who controls the construction of these branches? — A. They were done under contract, under the supervision of the engineers the Union Pacific employed ; there was no construc- tion company whatever ; there was an engineer in charge, and the lines were paid for in the regular way. Q. How were the prices to be paid to the contractors for the work de- termined ? — A. It was all done by the construction department of the Union Pacific Bailroad ; it was in the regular way ; it was done by con- tract. Q. Was it done by lump contract for so much a mile, or was it done directly by the Construction Company employing engineers to do the work! — A. We had no construction company. Q. The Construction Committee, I mean. — A. There never was any construction committee; there is a construction department of the Union Pacific Bailroad Company. UNION PACIFIC CONSTRUCTION DEPARTMENT. • Q. Did the construction department let out the contract for the build- iog of the whole road to some persons, or did it employ engineers and workmen and direct the construction itself? — A. In every case that I have known of it has made a contract which has been approved by the direetora for ibe constractiou of the ro^d for so much with responsib^'* U. S. PACIFIC 11AII.WAY COMMISSION. Q. WoiiUI that be doiio on sealed bida or proposalH beforehand? — A. Ah a riiU>, tbiit is the way we bavo always done. Q. Ab a matter of fact, do you know with whom thocoutraet for build- ing this Denver and South Tftrlc branch was made ! — A. No ; 1 do not, I will state, as it may enlighten the Coinmissioii, that all this worit, ever since I liave had Anything to do with the Union Pacific and long be- fore, wa^ done by whiit is called the "engineer department" of the company at Ouiaha, of which the chief was a Mr. BlickensderfiT, u Peuusylvania Oeruian, a man of high reputation and of great experi- ence. He had been connected with the earlyconstruction of the Union Paeiflc, and has recently been retired because of his years. Ho is now living at Omaha. He knows all about these itiings and can tell every- thing. Q. In regard lo this briinob, what is your personal knowledge, after the study yon hiive maile of it, in regard to the general question as a|i- plicd to tbc future of the road, whether Ihc retention and openuion of this particular branch will be of advantage to the whole syatcnt nod to the parent companyT — A. It has been a subject of great perplexity to me, great doubt and perplexity, during the two or three years sinoe I have bad charge. i}. So that you arc not prepared to make a positive answer! — A. If I were I would *have made it to the direct^irs and reached a decision lung ago. THE NEVADA CENTRAL. Q. Please give us the name of one of those liritncheH that yuu have made a subject of examination. — A. The Nevada Central, a property that wo once owned. Q. is it li stemuf the roadf — A. No. Q. Not connected with itf — A. No; it wiui a road (hat 1 fonml wo had all (he stuck of. It is in Nevada, and is some 200 or 300 miles from a». (J. Betweoii what points does it comnmuiiiate! — A. Between Auiitin and Battle' Moiuitain. It is on the Central Pacific. It was supposed it would, in some future period, bo valuable to us in connection with the develiipments in Nevaila. li. What is the length of the roail t — A, Ninety miles, I think, Q, Is it complete I — A. It is, « f — A. Yes; the directors or l)oud\ioU\eTs aT« v*t^ -seUfeciown neopT ^rp/n jwmf Yolk. CHARLES FRANCIS ADAM»^. 53 Mr. John F. Dillon. Messrs. Pbelps, Stokes & Co. ? The. Witness. Yes ; they supplied the capital to build it. Q. Where does the transaction appear in the books of the Union Pa- cific Company — ^in the investment account! — A. In the investment account, undoubtedly. Q. In what year I — A. I should say it would probably be about 1882. The reports will show. Q. What was bought at the time the purchase was made ! — A. The stock. Q. No bonds I — A. The income bonds were boup;ht. The report will show. Q. Did you make your investigation in regard to the circumstances under which this interest was acquired, or did you simply make a stud^^ of the road t — A. I never made what you would call a thorough investi- gation. I found the road in our possession, and I asked why in the world we had it; and afterwards, in California, I met the parties who had been engaged in the transaction and inquired into the history of the thing. Q. Please tell us whom you mett — A. I met the man who sold the road to us, a Mr. Brydges. Q. What is his first name! — A. Lyman Brydges. I met him and many others. He always insisted we had made a very good purchase. Oommissioner Anderson. They always do ! The Witness. Yes, I have been there. Q. Who QiCted for the Union Pacific in the negotiations with Mr. Brydges? — A. 8. H. H. Clark, its general manager. Q. He is living now! — A. Yes ; he is first vice president aud^general manager of the Missouri Pacific Railroad. Mr. Dillon was presiilent of the Union Pacific. Mr. Clark and Mr. Brydges met and made this bar- gain, and Mr. Dillon confirmed it. Whether it was in writing or not I do not know. Q. Was it ever reported to your board, or does it appear on your minutes in any place ! — A. I have never looked to see. It was all done befoi'e I became president of the company. Q. Do you know the terms of the contract ! — A. I do not. THE COST OF THE UNION PAOU'IC. Q. You do not know what the Union Pacific gave for this property ! — A. Yes ; our books show that. I did know it. When I closed the thing out^ the Nevada Central owed the Union Pacific about $565,000, if I Recollect right. Q. Does that include the purchase price! — A. It includes the whole investment account. Q. That account included all payments on bonds ! — A. All payments on everything. Q. Does the account show any return from the Nevada Central at all f — ^A. I think the Nevada Central — certainly when I had it — never did much more than pay its operating expenses. Tbat is, the Ne- vada Central was one of those roads which, in mining countries, are so dangerous. Any one who has had anything to do with them knows all about it. As tlie espression goes, '' The mines peter out." We have had several such cases, where roads for the time earned enormously. The most brUliaiit and noted case in the history of mining and railroads is the ease of tiie Oomstook lode. The Virginia and Truokee Railroad was for many years one of the most valuable roads in the United States, and then 54 U. S. PACIFIC RAILWAY COMMISSION. suddenly the Comstock lode ceased to pay. We have had iiutuerous simi- lar cases in our history. The mining railroads are a species of railroad gambling. That is, if you strike a mining camp which holds out it is the most profitable form of railroad there is ; and then, again, if the mines are worked out you are left with your railroad on your hands. Q. You say Mr. Dillon confirmed this contract I — ^A. He did. Q. The arrangement then was made before Mr. Gould became presi- dent of the road ! — A. Mr. Gould never was president of the Union Pacific. Q. Or director! — A. He was director at that time. Q. Do you know whether he had any connection with the action taken in confirming the contract I — A. Their oflfices were adjoining and I do not doubt that Mr. Dillon spoke of it to Mr. Gould when the ac- tion was taken ; but I do not think he had anything to do with it. Mr. Gould had great confidence in Mr. Clark. TO WHOM THE PURCHASE MONEY WENT. Q. Do you know who the stockholders were of the branches at that time f — A. I know all the money went to California. Commissioner Andebson. That is a big place. The Witness. Mr. Brydges had it. Q. He did not own all the stock and bonds? — A. No; he represented those who did, and' he got a very large portion of the money paid. It was a good bargain that he made. I made as thorough ^an investiga- tion as I couhl of that matter, and I became satisfied that the whole amount of money had been honestly paid over. Q. What I want to ask you is whether you have any information as to who was benelitfed by it ! — A. Yes, I have this information : that they were i)arties not in any way connected with the Union Pacific. I conld not find that a dollar of it ever went to any one connected with the Union Pacific. I made very careful inquiry as to that. Q. 1^0 director, or trustee, or large stockholder of the Union Pa- cific ? — A. Not one dollar ; I am satisfied of that. Q. When did you report to the directors that the Nevada Central had better be gi^veu up ! — A. At the first meeting after I became president. In September, 1884, 1 made a report and recommended that we stop paying the coupons. Q. Since that time you have had no financial connection with the investment ? — A. No financial connection ; I am still president of the Nevada Central Company, I believe ; we have never paid a dollar on account of it since. Q. Will you take up any other of these branches with which yon have made yourself familiar f — A. There are a good many of them, and you might read the list ; I will tell you all I know about any of them, as you name them. Commissioner Anderson. Perhaps that is just as good a way. The Witness. You will find the list a long one. Commissioner Anderson. I know ; but I believe you yourself con- sidered this one of the most important subjects of our investigation, and I do myself. The Witness. Oh, yes. I have given a good deal of attention to our branch system. Commissioner Andebson. Take the first one : The Central Branch of the Union Pacific Bailroad Company — Atchison, Colorado and Pa- cific Railroad Company. CHABLES FRANCIS ADAMS. 55 The Witness. That is one of them; I can inform you as to the Cen- tral Branch. Q. By whom is that road operated I — A. That road is operated by the Missonri Pacific^ under a lease from the Union Pacific to the Mis- souri Pacific. ME. GOULD'S PLAN OF DEVELOPMENT. Q. Where does it connect with the Union Pacific!— A. It does not connect with the Union Pacific. Tbis will require a little explanation, for our branch system is a large subject. I can explain it better with the aid of a map. At the time Mr. Gould was the principal stockholder, and, in fact, the directing mind in the affairs of the Union Pacific, the com- pany was not nearly as much developed as it is now ; and Mr. Gould had a large scheme for the railroad development of that country. His theory, which I think was entirely a correct theory for that time, was for the Union Pacific to be developed into a complete system, starting from Missouri Biver points between Kansas City and Omaha, and serving the country west of the river, bringing the business of all that region to Omaha, Saint Joseph, Atchison, Leavenworth, and Kansas City, and there delivering it to the roads running east, just as the roads west of Chicago deliver to the roads that run east from Chicago. It was a large scheme. You can easily see the whole plan of it, and how he intended to work it out, but he afterwards got interested in other things and gave it up. In carrying out this plan he proposed to have the Union Pacific acquire by purchase, or development, or otherwise, various roads west of the Missouri ; among these was a road called the Central Branch of the Union Pacific; it was a part of the original Pa- cific Bailroad scheme provided for by Congress in the charters of 1862 ; the first 100 miles oYit were subsidized by the Government, and in so far is a part of the matter which is referred to you under the act of Congress. The road ran from the town of Atchison in a westerly (lirec- tioQ through the northern part of the State of Kansas. It had been taken up as an enterprise by certain interests, and they had built ex- tensions, which were not subsidized by the Government. These exten- Bions threatened to interfere with Mr. Gould's plan of development. They had been bonded and stocked at a very low rate, and in 1880 they were feeding the Central Branch. THE CENTRAL BRANCH, UNION PACIFIC. Q. These extensions were feeding the Central Branch? — A. They -were, and are to this day feeding the Central Branch. The Jewell Ck>unty road and others are extensions of the Central Branch. Mr. Gould entered into negotiations with the parties controlling them. Finally he bought the Central Branch stock on account of the Union Pacific. The stock of the 100 miles of the Central Branch Bailroad rep- resented also the investment in the additional lines which had been extended farther west. His intention was ultimately to connect that line down, making it a part of the Union Pacific system. The stock was bought with that view. 1 do not know in what year. Q. Do I understand" that this Central Branch is between what used to be the Kansas Pacific and the old Union Pacific? — A. It runs be tween the two, in the interim in g territory. Q, Where does it connect with the Missouri Pacific! — A. It now con- iieots with the Missouri Pacific at Atchison. Q. When was the purchase effected by the Union Pacific ? — A. 1 can- D. S. PACIFrc RAILWAY CilSrMISSlON. ekX give yoii tliu csact ilato. ll han osciipci) tiiv memory, ll Ik stnt^il ill the i-eport of 1884, 1 think. Q. nave you a copy of tbe lease to the Misaouri Paoillot — A. \\\- have it iu oar office in Boston. Q. That 18, made by tbe Central BraniiU leasiii^r itself to the Missmiri Pacificf— A. I should have to look at tlio lease to see exactly Iiow ll. WHS made. I made that lease. Q. Is your interestasserted through the stock ! — A, Stock I We own the stock. We are the owners of the road. Q. Do you remember the amount of tlio bonded indebtedness f — A. It is stated in the reports. I could not tell you from memory. OHAEACTEE OF BUBINEBS DONE. Q. In reg.ird to tbe general business done on that road, what is tbe character of it t — A. A(fricnltnral business ; it is an agricultural road Q. lias that road paierty — mora valuable to a road rnnniug east from Atchison than lo the Uuion Pacific, but It is a very valuable railroad property. LKAKB OP CENTEAI. BEANOH TO BUS30UBI PAOIFIO. Q. IIow long is the lease to the Missouri Pacillcf — A. The present lease has a little over twenty-three years to run, Q, What are in general Iho terms t — A. The ternitu are that the Mia- souri Pacific is to operate the road, and that ail the note'iruings arclo be paid over to the Union Pacitle; the inducem^t for the Missouri Pacific, of course, being the control of the tntflic ; that is, it can oarry the traffic from Atchison east. Q. Is the Central Branch exposed to any immediate competrtiou of a peculiar nature f — A. Yes; the competitioD in that region is continually increasing. Whether it exceeds the development of the coantry I can- not say. Q. In regard to the transaction or the purchase itself, have yon made that a subject of personal in^'estigation I — A. To a certain extent, It happened long before I took charge. I took it as an accomplished (iwt, but I have examined into it. Q. Have you examined to find out who the parties were who were in- terested in the sale to the Union Pacific t — A. Ves, Q, Who were tbey! — A. Certain parties in Boston and elsewhere who owned the Central Branch. Q. Please give us their names as far as you remember. — A. Mr. Pom- eroy was one. He was suffering from paralysis and has since died. He citme to see me about it. Q. Were any of the parties who were interested in that sale in any manner connected with the Union Pacific or its affairs T — A. Xone whatever. Q. No director or officer ! — A. Not the slightest. Q. May they have been stockholders 1 — A. They may hnve been stockholders, but I know, in that case, tbey were not stockholders to any large extent. Mr. Pomeroy represented the Central Branch, and was president of it. Q. The whole of that transaction appears in your investment no- coitiit f~A. It does. CHARLES FEANCIS ADAMS. 57 Q. The date of the transfer of the securities and the amoaiit i)aid ? — A. I do not doubt it all appears. Q. As far as that payment is concerned, that I presume was also made in money by the Union Pacific? — A. I do not doubt it was. mCBEASE OP STOCK OF UNION PACIFIC. Q. Please state on what occasions the capital stock of the Union Pa- cific was increased. — A. The capital stock of the Union Pacific was in- creased twice. — It was increased at the time of the consolidation Q. The Kansas Pacific? — ^A. When the stock of the three companies were consolidated ; in 1880 ; that was when the consolidated company was formed. Q. After that consolidation, as I understand it, all the stock took the form and name of the Union Pacific Railway Company ? — A. The Union Pacific BskWway Company , the old company was the Union Pacific BailreMtd Company; it was consolidated into the Union Pacific Bailu^a^ Company. Q. The increase, if I remember right, was from about $36,000,000 to $50,000,000?— A. It was. Q. What was the subsequent action ? — A. Under some provision of the charter — I forget what ; it was before my time — they issued $10,000,- 000 stock. Q. At par? — A. At par; paid for, dollar for dollar. Q. That was subsequent to the consolidation ? — A. Yes. Q. Those were the only increases that you recall ? — ^A. Those are the only increases that have ever taken place ; So far as I can at this mo- ment recall, all the acquisitions of the Union Pacific were made with money ; I do not think we ever paid for anything in securities. NEW BOND ISSUES OF CENTRAL BRANCH. Q. Has there been any new issue on this Central Branch since the Union Pacific acquired its title ? — A. There have been some bonds of the Atchison and Colorado, I think ; the extensions, which have been is- sued at so much a mile ; for instance, when 50 miles of road were built it was mortgaged ; under the mortgage you would have the right to issue 80 many bonds ; it was increasing the general lien of that particular mortgage. Q. So that if the construction was unprofitable it might affect your interest as a stockholder? — A. Yes; like any other. Siiice I have been president I think I sold some $300,000 or $400,000 of these bonds, if I recollect right. Q. The Union Pacific itself would have no interest in those bonds? — A. They were in the treasury of the Union Pacific Company. This road bad paid them over to the Union Pacific for the construction of these ex- tensions, and they were a part of the assets in our treasury. The Union Pacific constructed the extensions, and received for so doing the stock and bonds. Q. Was that contract made in the same way as by your construction department ? — A. All of them. Q. Do yon know who the contractors were 1f — A. No ; but so far as I know or have been able to trace there has never been a suspicion of a oonstmction company in the Union Pacific. All has been done as fairly and in ^s strajgbtforward a manner as it could be. 58 I'. S, PACIFIC RAILWAY I COMMISSI OS. i)iie we bought np the bonds. I think we paid for them about 35 cents on the dollar of the original investment. That is my recollection. Q. Thirty-five cents on the par value of the bonds f — A. Yes. Q. You say 35 cents on the cost of the original investment ? — A. On the par value of the bonds. Then we extinguished them and consoli- dated and reorganized the road. The person with whom I dealt was a Mr. Wolcott, a lawyer in Denver, and he told me that he represented various holders, some living in Boston and some in New York. None of them had anything to do with the Union Pacific. It was a perfectly fair trade, and I thought we did tolerably well on it. THE LEAVENWORTH, TOPEKA AND SOUTHWESTERN. Q. The next company I find among those which are not directly con- nected with the system is the Leavenworth, Topeka and Southwestern Railway Company. — A. That was a company winch was formed to build a road from Leavenworth to Topeka. For various reasons it was deemed desirable by the Atchison company and ourselves, Mr. Dillon then rep- resenting the Union Pacific, to control the property. It ran between our lines. The two companies entered into an agreement and bought it, and it has been operated under joint management ever since. Q. When was the purchase made ? — A. That purchase, I think, was made in the year 1882 or 1883, 1882 probably. Q, Who owned the stock of the company before tbe X5mo\i "P^kfcV&fc . PACIFIC RAILWAY COMMISSION. fmrcliagcd ii! — A. I'liey wei-e locul iiarlies in Katisms. I turitvi Ihn uuuieor till! purty rcpresoDting tUtiotLorcoinpiiny. I knew it, buttbu aiTUugement wa8 one which Mr. Dillon mtide iu couneottou witll tbu Atchison people. They had Dothin^ to do with the I'liion Pocillc in aiiy form. That I can say at oneo. (}. Ifyoudoiiutlcnow who tliey were,how eauyou tdl I — A. Iteuause I did know. I cannot recall the names. It was a good while ago. I was not then connected with tlie Union Paciflc, and it made no iinprea- BioQ on mv mind. Q. There were $550,000 stock 1—A. Yes. Q. Wliat does that road aid for the stock ! — A. No, I do not. I do not think Huything wna paid for the stock. Aly impression is we bought the bonds of the road, and we took tfau stock as an inci- dent. That is my impression, but it would appear in the books. Q. Yon do not remember the cost of the road at first T — A. No; that was before my time, like many other things tJiat were purchased before my time. Q. I find iu your supplemental income account for 1881, "Advances' for account of the I^ai'euworth, Topeka and Bouthweslem Kailroa*]. Company coupons iu 188^, written off, J27,tiOI)." What is thatt — A. 1 suppose Mr. Mink can esplnin it. I supiioso it means written off to profit and loss. We regarded it as a bud debt, and then-fore passed it to our income account, like any other bad delit. Q. Do yon still pay the coupons T — A. We do. Q. Do you remember whether your company owns them all! — A. It is ajoint guurantee of ours and the Atchison. We each pay half. Q. What projiortion does the company holdt — A. I do not think wo own any. We owu none of the bonds. Q. I understood your j)rior statement to be that you ucqiiirccl the tJDe by hnyiug the bonds, and the stock was thrown in f — A. No, no. Letmeaiie, bow was Ihatf We g\iarivi\teei\ t\\6 \>oim\?. w »*>nwtbUMg of CHARLES PKANCIS ADAMS. 61 that sort. Wo pat oar gaarantee oa tho bonds ; some arrangement of that kind. The stock has no value. Q. Yoa bought the property, whatever it was, subject to the bonds? — A. Yes; and pnt our guarantee upon them. Mr. Lane. The amount of the bonds on tho road is $1,380,000. Q. And of that the Union Pacific guaranteed half, and the Atchison, Topeka and Santa F6 the other half! — A. That is my recollection. My recollection is somewhat vague about all of these things, for they were done before I took charge. I afterward looked them up, and then they passed out of my mind after I had made my examination, which, of coarse, had to be done through others. Q. What is your judgment in regard to the future of this company f Is it ever likely to earn over operating expenses enough to pay interest on the bonds?— A. My impression would be to-day that the situation is 60 changed in that region that the possession of that road is of no im- portance to the Union Pacific. Q. And as far as paying for itself is concerned, what is your judg- ment ? — A. I am not clear about that. Ever since I have been in there has been a sort of languid negotiation going on between the Atchison Company and the Union Pacific — we have several joint properties — as to working them. How it would be if we owned it entirely, or Atchi- son owned it, I cannot say. But I should think it would be important to one or the other. MANHATTAN, ALMA AND BURLINGAME RAILWAY. Q. The next item is the Manhattan, Alma and Burlingame Bailway Company. What is that f— A That is a road running from Manhattan on the Kansas Pacific, and that again is a connection that we own jointly with the Atchison road. Q. What road is it ; how many miles f — A. A. little road running from Manhattan to Burlingame. I think it is some 40 to 50 miles. Mr. Lane. Fifty-six miles. The Witness. Burlingame is a point on the Atchison road and Man- hattan is a point on our road; and this road was considered a necessity, or what not, and it was built between the two ; and in order to prevent onr quarreling over it, it was agreed that it should be built on joint ac- count and jointly owned and jointly operated; and it has been so from that day to this. Q. Your company owns half of the stock? — A. Our company owns half and th€^ Atchison company owns half. Q. Nearly half; $418,650 out of a total of $1,000,000. There must be some small holding outside of the two companies! — A. There was some township stock, unless the towns sold them; it has no value. Q. What is the character of that road ! — A. It was an agricultural rosid, running through a poor country, if I recollect rightly; I have been over it. That is one of the roads that there has always been this feeble negotiation going on about between the Atchison and ourselves as to \yhether we should take that, and we take the Leavenworth, Topeka and Sonthwestern, and they take this. Q. Does it pay the interest on its bonds! — A. I think not. Q. Does it pay operating expenses ! — A. I think so. You are now getting into a class of roads where, when you say ^^ Do they pay interest CD tbeir bonds?" the answer is twotbld. It may be that they do not do it directlj, and yet they may pay a very large interest indirectiy \>^ ^^Xmi^- fim they bring to our Uoe. This forms quite an imijK>Ttai^t ^V9^ S. TAririC liAll.WAY fUMMlH^lN.N, ^H with our tbroiigli line, Tor it runs away ap to tlie Uniou rit(;ill(-- proper division. It cunnevtrt witli our line nt Alaiihattan. All tlieee ronds, ex- cept the central braneli, coiiitect wilh our iniiiD liues. Q. YoH say it fonneota with the Uiiiou PaciBc 1 — A. Wilh tlj« Kan- sas division of the Union PaciQc ; Mauhattan is quite a station on the Kansas Pauiflc division ; when you go over the road you will seii the intercouueciion in these things more clearly ; that road is operatird by the Atchison. Q. When was this purchase made f — A. That was before my tiiw. Q. Uavoyou examined into the eircumstances of the purchiise at all 1 — A. Somewhat. Q. It was a coDStructiOD, rathpr; eoustructed Jointly by the [Intun radlio and Atchison companies T — A. Yes. Q. Hare yoa ever seen the construction conlractsT — A. ^'o; 1 know nothing abont them. Q. Do you know who wasintoreMt^-diu thuissueoftlie stock or bondn iir the uiaiinor in which it was paidi — A. No ; I do not believe anyone a Q, Somebody must have constructed the road aud wceived the stock ami bonds T — A. No ; it was done in this way, aa I understand it : The road wiiH constructed by the conlj-actor ; it had its own organization, the Manliattan, Alma and Burlingame organization; the contract orre- ceived the stock and bonds of the company, and then he turned them over in a Inmp to the other two companies, who divided them between Ihem and paid for the road ; they paid for the road aud tiiey received the slot^kand bonds, which went into their treasuries; that has been the uniform practice, so far as I know, with the Union Pacillc. Q. But who tho persons wore who were interested in the construc- tion you caunot recuilectf— A. Probably no one but the contractor, and his contract is on file in our olHct>, Q, And Mr. Mink can tell us about this I— A. I have no doubt of it. They are probably in the hands of the Atchison company or in thuso of our company at Omaha. Q. In reganl to the paymont of the interest on the bonds I presume the Onion Pacific pays lialfand the Aliishison pays the other U;ilf I — A. Uow is that! Mr. liANE. We never disposed of our Imnds. The WiTNKss. They are in our treasury. Q. You have them in your treasury I — A. Yes. Q. Ito you not kwp the account, or is it the same as if ynu paid out the interest and it comes back on the bonds t — A. Exactly the same They are in our treasury, Q. As I nntlerstand it the charge for interest ap|iear<< a.t a charge for interest and then it appears in your investment returns t — A. Then it' appears in our receipts — our general income. Q. You do not lose anything byitt — A. We do not lose anything. It is out of one pocket and into the other; it is a book-keeping accoURt, that is all; It simply makes it a branch of our road. MANBATJ'AN AND BLUB VALLEY BA.U,WAT. (J. The next I liiid is the Manhattan and Blue Valley Koad i— A. Tho Manhattan and iSlue Yaliey is a very important link in our system. It iitart« fVum Manhattan, on the Kansas I'aclflc, and runs up the Blue Jtirer lo a Jaavtioa with theOuiaba and ItepaWinan Valley, and so con- aeete the Kansas J*acifiG division wUb U\c Cmon Y-Awftv. ft:\v\w.w\', (wiiv CHARLES FRANCIS ADAMS. 63 sequently it is a throagb line between the two divisions. Two years ago I found, on inquiry, that for the purpose of carrying the company's material between the Kansas division and the Union Pacific or Ne- braska division, we paid aboat $40,000 a year freight money to the Mis- souri Pacific, at the regnlar charges; -and I was impressed with the necessity of having a connection of our own \ this is the connecting link. Q. How many miles long is it! — A. It is 40 miles long. Q. Between what points does it operate? — ^A. It runs from Manhat- tan to Garrison. Q. When was this purchase made f — A. It was not purchased ; wo boiit it. It was built since I came in; it was built under my orders. Q. The language of your report is "the Union Pacific purchased its interest in the stock." — ^A. Oh, yes; when I became president there was a bit of a road built which had been abandoned. That was done when Mr. Dillon was president, and it had not been operated. It ran from Manhattan 10 or 12 miles up the Blue, and we have since continued it 28 miles farther to the point of connection. Q. Does it pay interest on its bonds! — A. It does a very large busi- ness. Q. How large a business ! — A. It has only been running three or four months, but it has carried an enormous tonnage during that time. I cannot tell you how large. Q. This report of 1885 is before it was complete f — A. Yes ; and it is only mentioned for three months, I think, in the 1886 report. NATURE OF ITS BUSINESS. Q. What is the nature of the business ! — A. Through business and local business, both. A freight business between our Union Pacific di- vision and Kansas division. There is also a large business between the towns. It has brought a profit to us in a way which you gentlemen will come across very frequently. It is reported in the returns for these 40 miles only, but all of that business we haul for three or four hun- dred miles beyond, and we would not have it at all, except for these 40 miles. Q. Is it of more benefit east or west f — A. This road runs north and south. Q. Is it of benefit to the points on the Union Pacific that lie farther to the west or farther to the east f — ^A. It is farther to the east mainly that it is of benefit-. It is between Kansas City and Omaha that it con nects. Q. What is your idea of the desirability of the branch f — A. It is in- dispensable. To part with it would be almost like cutting oS a vital member. Q. A connecting link ? — A. That is it exactly. It was the missing link until we built it. THE NEVADA CENTRAL. Q. The next road is the Nevada Central, and that you have already explained I — A. Yes. In order to complete the line of inquiry I wiil now say that the Manhattan and Blue Valley was built in the regular way that we built roads. A contract was made, the stock and bonds were put in our treasury, and we paid cash. Q. Aod bant ander your supervision 1 — ^A. Entirely. T\i«A.\%,l^x- soDsUy do not know any thing about it ; but I have impVicvt co\iM«iV»> U. H. rACIlMC ItAll.WAV COMMIMaiOM. ill Mr. Bliciiensderfer, our tiliief rngiaeer. I lielieve biin to bo one of the most Iioncst men on the fnco of the earth, ancl my only regret is that tils ngc inenpARJ tales him for more uctive work. OMAHA BELT RAILWAY. Q. The im\t is the Ooinha Belt Kailway Coiuimtiyr— A. That tlot^'x not now belong to us. There is n history attached to that enterprise. We have Uot paid for it. CbiiiniisHionci' Andbbson. The statement of the report of 1885 is that all the aecuritics of the company, when issued, will be owned by the Cnion Pacific. Mr. Lane. Th»t is th» 1884 report. The 18S5 report gives the expla- nation. Tho Witness. It is explained in the 1885 report. I think the-Uaioa Paeific was rather dispossessed of that property. Q. Will yon please give tlie exphiuatiuu of this, so that it will appear on our miiiutesf — A. Certainly. Q. Uow was it that you eoased to huve iiiiy furtlu-r interest in this road i — A. It huppenud in this way : When I took charge of the Union Pacific IheUmahu Belt was upet oehemeufMr. S. II. 11. Clark, general mnnager uf the tJuiou Facifleut that time. Shortly after J took charge, Mr. Clark, who had been many years with the Union Paciflc, severed his couueutiou with it, and in doing so, he did uot like to lose control of the Omaha Belt Itailway, which was bis pet scheme. He thcrefom made an arrangement with Mr. Gould, of the Minsonrl Pacific, under which Mr. Oonid advnnced money to complete the Bolt line; and lean only say that by Moine arrangement, which it in unnecessary to go into, we found that the control of the Belt line had i>a8sed out of our hands into the hands of the Missouri Pacihe. Liligation followed ; it was not a friendly litigation; the roHuIt was that after a time we concluded it waa better to let the thing go ; so we made up our bill or account, bad a reference, and were repaid all the money which we paid in. The prop- erty iheu passed into the hands of the Missouri Pacific. Q. Then the Uuiou Pacific has received back all that it cost T — 4. Yes; it has been Netlletl within a fortnight. The award has been made by a referee and the niouey paid to ns. SAINT JOSEPH iHD WE8TKRN. Q. State HI regard to the Saint Joseph and Western liailroiul Com- pany.— A. That is now a pitrt uf the Saint Jo and Graud Island. That WHS one of the concerns like the Central Branch. It was a part of Mr. Gould's groat scheme of a niilroad system went of the Missoari. In order to carry it out, they obtuiueer cent. An accumulation. The WiTi^EBS. It was quite large. Uur books will sliow it. la sorry that I have not got the last report here for yon. Q. Thereportof 18301— A. Ve«. Commissioner AndbcsoN. We have it hen*. The Witness. That is merely the preliminary one. The fall ilod ment is not yet set up. It will be in the course of next week. Q. They are the returns lor 1885 which appear in the report t — i Yes ; we paid a dividend on Utah and Nevada the other day. I fopg the amonnt.of it. UTAH OEKTEAL RAILWAY. (J. The next mad is the Utah Central Railway Company. Will yi describe that!— A. The Utah Central is a property that was started I the Mormons, and long before I hart anything to do with the Union P cifle. It ran down from Salt Lake City from Ogden. It was then a tended to — I forget what point. Tlie Utah Soutborn was to KriM Our interest is simply a controlling interest, not a minority interest,!! the stock. We h.ive none of the bonds. Until the Denver and Rli Grande road came to Salt Lake the properly was very valuable snA made large returns. It had been extended some 100 or 150 odd milM, or something of that sort, to Frisco, in order to reach the Horn »i)T«l! mine. lu the way those things are apt to happen, the Denver and Btl Cmnde came in, and at the same time the Ilorn silver mines " pot«nd out" or caved in, and ceased to be productive. That wa« about tU time I took charge, and then the Utah Central oeased to be profltablft H. The total length at present is all given under the Utah Ccatrilli) from Ogden to Frisco, as :i80 miles T — A. Yes. ij. I notice in your return for 1885 that the not earnings fall ofl'froH $l.lUO,OiH} in ISS-J to $483,000 in 18*4.— i. T\\at >«&& owiug to the vHuaea I weutioiietl. One was tho commg'm oi CMnv^^S&oTi, " 'hetirij CHARLES FRANCIS ADAMS. 69 that line very seriously, and the other, the Horn silver mine, worth to the Union Pacific Railroad at least $1,000,000 a year in traffic, suddenly stopped producing. There was no reason to suppose that such a thing was going to occur. It is an illustration of the ups and downs of min- ing. Q. I notice that the bonded indebtedness is $4,000,000. — A. Yes ; that is not large for a road of the length. Q. In your judgment, is that .road able to earn operating expenses and interest on this bonded indebteduess ! — A. Oh, yes; it does now, even in these bad times. Q. The account of the operation for 1885 shows a deficit of $53,000. — A. There may have been a small deficit that year, but it about pays its interest charges now. NATUBE OF BUSINESS AND FUTURE PROSPECTS. Q. What is the character of the country through which that road goes f — A. The upper portion of it is agricultural, and then you get . into a region with some grazing interests, and then into a desert and mineral country. The portion down in Southern Utah is about as bad as Arizona ; but the country will fill up with population by degrees, and they will irrigate more and more, and that road will take care of itself. Q. You'are quite positive that 4ts future prospects will keep it free from being a burden ! — A. I think so. And if the Horn Silver Mine were to get into shape again and go on producing — and I believe there is still silver in it — it will become once more, in connection with the Union Pacific, an enormously valuable feeder, because we have a thou- sand miles haul from Ogden to Omaha. It was formerly an immensely valuable feeder to the Union Pacific. Q. Does the traffic that is derived from that road pass over any con- siderable portion of the parent road f — A. The whole of it, from one end to the other, from Ogden to Omaha. It was that road and one or two others which made the palmy days of the Union Pacific. Q. What is the distinction you draw between holding a majority inter- est and holding the control! — A. I should consider that a minority inter- est may be a controlling interest, if it is sufficiently large. For instance, two-fifths is generally a controlling interest. The other three-fifths will not combine against you. Q. You then act as president of that road f — A. I am president of that road ; but then it is managed by John Sharp. Q. Do you know anything of the circumstances under which the Union Pacific acquired its interest ? — A. No, I do not ; it was acquired long ago. Q. Back in 1872 ? — A. There are other members of the board of direc-^ tion that can tell you all about these things. Q. We would like to have their names. — A. Any of the old mem- bers, Mr. Atkins or Mr. Dillon or Mr. Fred. Ames. They can tell you all about these things. I know nothing about them. Q. State in regard to the present working of the road and its opera- tion.—A. It is worked by "Bishop" Sharf). I know nothing about it. Q. He could give us all the information we desire. — A. Oh, yes. He lives at Salt Ijake. Commissioner Andekson. Probably we shall live at Salt Lake for a while. The Witness. You will be there, and you can get it from Mm* U. 8. PACIFIC RAILWAY COMMISSION. WASATCH AND JOKDAN VALLEY EAILKOAD. Q, Tbe next IB the Wasatch aud Jordan Yiillo.v Kailroail CompaDy. — A. That was dosed out and wouud up; probably it baa been consoli- dated. Q. The statement is, the Union Pacific owns $10,000 of its bonds ; you do not know when it was acquired or antbing about itt — A. Xo; I should say probably it was an old branch; it has gone along on onr books ; there is no road of that name ; oh, Mr. Mink now t^lls me that since the report of last December we wrot« the account off ; it has dis- appeared from onr books. COLORADO CENTRAL BAILItOAD. Q. We pass to what you call the operated lines ; tbe first of these is the Colorado Central Railroad Company. — A. The Colorado Centra! is a road north of Denver, which Mr. Uotild, in the early days of the company, coustrncted through to Cheyenne in opposition to the Denver Pacific, which we did not control ; I know nothing about the early his- tory of that roaa\i(i Dowb. Tlie WiTNKSs. Mr. David i)ows has been in many yearn. Mr. HoLMKM. Hn ba« been in and Imou oiitt Tlie WiTTSKsa. He has been many ypars a diractor. Mr. HoLMKS. Granville M. Dodge. Tiie WiTHKss. He has been many yeiirs a (lire<'.lor, Ily CommiHi^ioner Anderson: Q. He WH8 the enginper ! — A. lip was 1 In' uii-fiiial (^iigini road. Mr. HoLMEB. Udlgate lloyt. TlieWiTNKss, Ue is now. Mr. BoLSiKS, John 1'. S|)iuilding. The Wu'NKss. U« is a now director. Mr. HoLMKt). Andrew II. Qrei-u. The WrrNKsa. Uu oiime in rccKptly. Mr. Hoi,Mt;«. John Sharp. The Witness. John Sharp liasboen in ni,iiiy years. Mr. HoLUK». .lames HamsetJ. Tlip W1TNK88. He came in recently. By the Chairman; Q. The uiajority of the present directors or interest have I>een in since the beginning t — A. No; I slionid say not. I Hlionld say the other way. Q. How much the olher way ! — A. I sliouhl say not more than f'onr have Iteen in since the beginning, possibly five, ont of lll'teeii. ECHO AND TABK CITY RAILWAY. CoMiMiiscdoner jVndebson. The next I find is the Echo and I'ark City Railway Company. The Witness. The Echo and Park City isalittle bitof a road, which connects witli the Union Paeillc — not far from Ogden — and runs up through the Echo Cailon to Park City. It is practically our siding to the Ontario Silver Mine. That hua been and still is tlie richest silver mine in the world. I take it there is nn other like it. It paid itfi one hundred and seventy -fifth dividend, I think it was, the otber day, By Commissioner Andeeson : (J. The first mortgage bonds are gi ven at (4r^0,00() and the capital stock ix |t'iSO,000 also, 1 believe. In your Judgment, is that road able to earn theintereatonitsbonds, inatldition totlieoperatini^exiienseat — A. 1 suppose that road has earned its cost twenty times over — I might say fifty times over. Commissioner Anderson. The earnings from 1881 to 18S4 are given as high as $:1C,000 and $35,000. The Witness. That is merely for itself. Itisa very short haul. It brings the trafiiouf the mine down to our main line. The main line has the whole advantage of it. Commissioner Anderson. In 138r> we find it reported as » deficit for Its own business t The WiTNBBB, I dai-e say. Q. How iln ytm explain tliat I — \. SiraYiVj VUat \l\aw\ftU a very short till timf it then not pay. CHARLES FRANCIS ADAMS. 73 Q. How would yon explain the difference between the net earnings of $a5,000 in 1884 and the deficit of $15,000 in 1885!— A. I should have to look it up. I have never paid much attention to the Echo and Park City Company. 1 have always regarded it as a species of siding. ITS VALUE AS A F££D£R. Q. The peculiar advantage you state in regard to that road is that it famishes to the parent road a complete haul over its whole length T — A. Yes; of the Ontario mine. There is a coal mine there also — Grass Creek. Q. Do you know anything about the manner in which the Union Pa- dfic Railway Company obtained possession of this roadf — ^A. iN'othing whatever. That dates back to 1871 — sixteen years ago. Mr. Holmes. It was started in 1871, but was reorganized in 1881. Q. In 1877, the report of 1884 sa\8. That is prior to your dy- nasty f — A. Tes ; and I never looked into it either. Q. Who could inform us in regard to that ?— A. I have no doubt Mr. Dillon coald tell you all about it. Q. Yoar judgment is that the retention of that branch would be a desirable feature for the Union Pacific !— A. There is no question what- ever about it Q. Other things being equal, the branches at the west end of the Union Pacific are, I judge from the way you testify, more important than those at the east endf — A. That depends entirely on circum- stances; but as a rule yes, unquestionably. You may have a very un- profitable branch at the west end, and then it is no good anyhow ; but other things being equal, a branch at the west end is the most valuable of the two. Q. The most through traffic that comes from the branches is done in connection with the eastern part of the country I — A. Yes ; and it comes over our whole line ; we have wheelage on it from one end to the other. GEOBGETOWN, BBECKENRIDGE AND LEADVILLE K. R. Q. Explain as to the next road, the Georgetown, Breckeuridge and Leadville Railroad Company. — A. That is a connection or extension of the Colorado Central ; it is not consolidated with the Colorado Cen- tral ; it is a line known as '^ the loop line," and is one of the engineer- ing curiosities of the country. Q. What was the object of acquiring it ? — A. It was intended to make a short line from Denver to Leadville through the Loveland ' Pai^s. It ran up to Central City and other mining camps, which are of themselves valuable, and then it wound up through the mountains to this point, and was intended to cross over; there are now 14 miles of missing link, and whether we will put that through, making the road the ^^ Leadville Short Line," is a question to be decided. It is a short road, and an extension of the Colorado Central — only 8J miles long; a very difficult piece of engineering. Q. Its business is mineral !— A. Its present business is mineral ; and somewhat of pleasure travel. Many people go uo there in oider to get . to Oray's Peak. It is an engineering curiosity also. It winds about over itself, and every one who goes to Colorado goes over it in order to see this mountain road. . 8. PACIFIC RAILWAY COMMISSION. Q. Tlie operating expenses are reported to exceed the gross eam- ingal — A. I Bbould think ou that 8 miles the; probablf most. ITS VALUE AS A FEEDER. Q. Doee tliat road give any bosineos to your parent road I — A. Oh, yps ; everything it bag comes down over the Oolora*lo Central. Q. now con a road nhoae whole trntfle is less than its operating ex- penses, and the annual businesR only amounts to $7,000, be au advan- tage to the Union I'aciflc ! — A. Becanse that 87,000 may represent over a longer haul on the other road tKXi.OOO. It would depend ou Lho length it was carried over the mother road. Bneh a case as 1 suggest is !i thing perfectly easily to be conceived, and it exists in the case of the Echo and Park City. Q. It can be computed, but has the compntation been made! — A. Ob, J es ; I have had those made every year in order to ascertain what the branch lino business of the Union Pacific road is worth to it. Q. Have you made it for this jiarticnlar branch T — A, For that par- tieular branch. It is merged with the rest. I have not made it for that. Q. Who has charge of tbatcomputationT — A. They always go to the comptroller. Q. Mr. Mink f — A. Mr. Mink bus theuj jircpared for me. Q. And he eau furnish you with all those statements T — A. Yes. Q. bo yon know nnytbitig about the circumstances under which your interest in that company was acquired t — A. In the regular way. It was built by us. Our chief engineer laid it out, and it was built by our coDstmction department. Q. It has been con^itructed since your administration I — A. TSo; it was before my time. In 1882 when 1 was out Iliere they were at work on it. GOLDEN, BOULDEB AND CARIBOtt ItAILEOAD. Q. I now tind the Gohku, lioulder and Caribou Railroad Company : will you tell iia about that I — A. Has that road not bren discontinued ! I think that has been merged in the Uenvei, Boulder and Marshall; practically it was a sort of switch to the Marshsill mine. Mr. Holmes. Yes, from Boulder to tlie Marshall coal mines. The Witness. Since we construcied theDeuver.Boulder and Marshall we have a better line, and so we have discouiinued that, working our business over the other line. Q, When was that road constructed t — A. We own the Marshall mine, and it was constTUcled to that mine. No ; 1 am mistaken ; we did not own the Marshall ; the Louisville mine we owned. There was a rjaarrel there. When I came in it was one of the vexatious question!) I had to deal witb, and I dealt with it through the Denver and Marshall road, which made a short line, and we carried the coal out by that. Q. It appearN from .vonr report that it cost the company 8ill.'0,000t A. I should think it likely. Q. Do you know anything abcnt the circumstances attending the ex- penditure of that money ! — A. Nothing whatever. Q. Who can give us those facts T — A. I have m doubt Mr. Dillou can ttill you all about it. GREELEY, SALT LAKE AND PACIFIC RAILROAD. Q. I now find the Greeley, Salt Lake ami Pacific Railroad Company; tvill yon tell lis about tliatt — A. That is a VrsvwcXuac ■, \X, t9.\\ \\v ix'O'Ww CHABLES FRANCIS ADAMS. 75 Greeley of the Colorado Central to oar quarries at a point called Stoat, and has never been carried any further. It is practically a road with which we bring stone down from these quarries and Bhip it east. Q. How long have you owned your interest in that road f — A. Long before I had anything to do with the Union Pacific. Q. The report of 1884 says that this road was incorpora'ted in 1881. It must have been acquired after that, was it notf— A. I only know that when I went over the road in 1883 we went up to Stout ; that was my first acquaintance with it. Q. What is the length of the road t — A. Fifty-four miles. Q. What is the character of the road ! — ^A. It is a road that runs through an agricultural and grazing country until it gets into the hills, and then it goes to these granite quarries. It was always supposed it would go up the pass beyond — that was the original idea — into tHe l^orth Park. Q. The reports show a constant deficit. Is that the present case f — A. I dare say ; I do not remember. Q. What is your judgment as to its future! — A. It is a very valuable feeder, indeed; it brings enormous quantities of stone to us, which are carried down to Kansas City and Omaha. When you get up there you will see an enormous movement going on ; but the haul is short, and the road itself gets little from it ; the profit goes to the main line. "STONE DEPAETMENT" OF UNION PACIFIC. * Q. What quarries does this road connect with ? — A. Those at Stout. Q. By whom are these quarries owned f — A. They are owned and operated by us. We have a Stone Department there. Q. Do those appear in your report as one of the investments outside of railways! — A. Yes; the Stone Department makes its own reports, just as the Coal Department does. Q. Is the quany used by you in connection with the masonry work on your own roadf-i-Yes ; for instance, we are now building depots out of the stone we quarry there. We buy our own stone, just as we buy our own coal. Q. Is it a distinct company t I mean is the ownership of this quarry effected through an organization or company f — A. !N^o, I think not; we work it exactly as we work the coal mines at Bock Springs; it is a part of our organization. This department is credited with the prices it gets. They keep their own accounts — they have to — to see what the stone costs, and we get it at cost. Q. When did j^our company acquire title to the quarry ? — A. I do not know. Q. It was before your time ? — A. It was long before my time, and we must have taken up the sections in the regular way. It is not on the land grant. Q. Was the main object of acquiring title to this Salt Lake road for the purpose of making that connection ? — A. I cannot tell you that ; that was before my time. Q. Do you know anything of the circumstances of the acquisition of the title to the stock and securities of the Salt- Lake Company f — A. No. Q. Can Mr. Dillon give us that information ! — A. I have no doubt he can. Q. What is your judgment in regard to the advisability of retaining that roadf — A. It is very valuable indeed. It is a source o( %t^^\> ^^4l gwwiDg buaineaa. I am building another just exacUj \\Vl^ \Xi X^Xk" Bkcuii: , H. PACIFIC BAILWAY COMMISSION. Butik Horn qii-.irrioa now, TIil< whole MinHiftsippi ValUi,y in Onx'oUl of titoue thnt is worth anything, and we Rliall have a hirge buHiaeSH, all down hill. Q. The groat advantage t)eing that the etone will be required at the eaut cud of your eiitin^ line! — A. Of the entire line, 700 miles oif. .UlNC^TION CITY AND POIIT KEAHNEY. Q. Explain about the-Tniiction City and Fort Kearney Builway Com- pany I — A. That iH a road i'rom .lunotion City on the Kansas Pacilie to Fort Kearney and beyond. It is an agricultural roiid, and waa bufore my time entirely, and it is an agricnitnral feeder of the K;in sas Paoitle. Q. Do you know when the oonipany arqnired its interest in that road I— A. I should have to look and see wlien it was. Commissioner Anderhon. It came thr(>u;^h the Kansivs I'aoiAo, I aee in your report. The Witness. Yes; it came Ihmngh the Kansas Pacilic. It was be- fore the couHOlidatiou, Q. Does it pay interestand operating expenses T — A. It pays its whole operating expenses, bnt does not quite meet its fixed charges ; but tho bonds are in our possession. Q. What is the point of connection I — A. Junction City. Q. How far from Kansas Cityf — A. One huadre to l>t'cemb(.>r, lS8fl, acconling to your income acooaot, if. it not T — A, That stretches over a great number of years, Q. Vou know nothing of the circumstances relating to tbe acquisition of tbe interest T — A, I know more or less, for I inquired iuto that, bat Mr. Holmes can tell you better than I, and my information is based wholly on bearsay. MONTANA RAILWAY. Q. Will you esidain about the Montana Ilailway OompauyT — A. We have a Montana Railway and the Montana Union. This is a branch from our Utah Northern to the Anaconda Smelting Works. The Anaconda Smelting Works are some enormous works owned by James B. Haggin, of California, and this is practically a branch line to them, over which we do an enormous business ; it has been very pro&Lable, indeed. Q, How long has that road been operated ! — A. Only about three years, I ihink. It was finished after I took chari^e. Q. What is the ownership of Ihe Union Pacific in thati — A. Itowna the whole of it, I believe. It owns all the stock. We never had any bonds on it. Q. By whom was that road constructed t — A. It was constructed in the usual way by Mr, Itrinkendorfer, the engineer — by our constnto- tion department. It was constructed under contract. Commissioner Andekson. I see this is a narrow-gauge roadf The Witness, Yes. "TlIK NARBOW GAPOB A FIRST-OLABS NtHSANCB." (j. In regard to the construction of a narrow-gauge road, what 19 your judgment as to the eflrct on the nsef^ilness of the road so cott atrncted ! — A. I consider the mirmw gauge a first class nuisance. Q. In all cases f — A. Yes ; 1 never saw a narrow gauge that I wonld give a cent more for because of its being narrow gauge. Q. This road has been constructed on a narrow gauge! — A. It hasj and we are going to make it a standard gauge next summer. Q. Was not this done since your administration! — A. Yes; it was poi't of the Utah and Northern narrow gauge system, but we are going to widen the Utah Northern nest summer. Q. !n your judgment, then, in almost every case tbe narrow gauge is. imdesirable ! — A. We haven't got a case of a narrow gauge connected' wff/i tbe Union Paeiflc where 1 do not think \t wo\i,\0k^'o«ttftTtoUaT8' theataatlanl gaiigo. CHARLES FBANCIS ADAMS. 79 COMPARISON BETWEEN NARROW AND STANDARD GAUGE. Q. What is the differeace, under ordinary constraction, in the cost of coustractionf — A. I cannot tell yon, but I do not think it very great; the whole theory of the narrow gauge is broken down ; the theory under ▼hicb it started was that it could have very much lighter rails, be- caase it had very much lighter equipment, and it would require very much lighter structure ; but since that, under the pressure of business, they have found it necessary to increase the weight of rails, and of lo- comotives, until they have got it up as high as the standard gauge was at the time the narrow-gauge roads were built ; and the only ground it can possibly stand on now is that it can climb to i>oints which the standard gauge cannot reach ; for instance, on the narrow gauge you go over 4 per cent, grades — that is, 216 feet to the mile of ascent. Q. Is it your present policy, wherever it is convenient, to alter the narrow gauge to the standard gauge? — A. Yes ; so far as we can. Q. How much narrow gauge have youf — A. Fifteen hundred miles, more or less, I should think — the Utah Northern, the South Park, and the Kansas Central. OMAHA AND REPUBLICAN VALLEY RAILWAY. Commissioner Anderson. I pass now to the Omaha and. Republican Valley Railroad Company. The Witness. The Omaha and Republican Valley Railway Company IB a system of branch lines which we have built in Nebraska, and which feed the main line of the Union Pacific. It is a Union Pacific diyision. It is changed since the report you have before you. In our present re- port it has about 750 miles, I think. Commissioner Anderson. I notice the earnings take a great jump in 1883 or 1884. The Witness. The country is filling up very fast. Q. What is the character of that country ! — A. Agricultural. Q. Please describe the other portions that have been consolidated with it to make up the 700 miles f — A. We have put all our branch lines ID Nebraska and as many as we could of those in Kansas into one con- solidation, which includes properties both north and south of the main division of the Union Pacific. Mr. Holmes. It is more easy to treat that un^er the name of the Omaha and Republican Valley Railway Company, in which the railroad, with others, was consolidated. Q. This system is now known as the Omaha and Republican Valley Railway Company ?— A. Railway Companj^, yes. Q. Please describe the character of the business done by that road. — A. Agricultural. Q. Does it do any mineral business at all ! — A. iN'one whatever. Q. What is your judgment as to its future ! — A. I think it good. I should be very happy to buy that road of the Union Pacific at any time. I think very favoralJly ofit. Q. Do you know anything in regard to the circumstances under which the Union Pacific acquired its interest ! — A. It was in the regular way. The various roads were built under contracts made by our construction department, and paid for by the Union Pacific, and all the stock and all the bonds were pnt into the treasury of the Union Pacific. Commissioner Andebson. I notice your report ^tai\/^ \\i<^ TJiamk PaeiScowna all the bonds except 12^000! U. 8. PACIFIC RAILWAY COMMISSION. 'I'lio Witness. I do not know bow they got out. Q. Is tlu^ road valuable as ft feeder, ulso J— A. Verj". The only difll- rull.v with it i» tlmt on traffic to auiu the Jact that you have examined in detail from time to time the accounts of the road. ORIGINAL COST OF OONSTKUCTION OF UNION PACIFIO, By the CnAiBMAN; Q. What was the original cost of the constmction of the Uuion Pacific! — A. I cannot tellyou. Q. Abont whatT — A. Tliat goes fkr back into the early hiatot?, twenty years ago. Without long examinations of accounts aud records I should he unable even to form a Judgment. Q. Whoro can we get that iuformalion T — A. Yon would have to go In the original records. It was a very confused stateof affairs in those (lays. You know it was the period which immediately followed the war, and the roail was built in the most costly way in which a railroad conia be built. There has never K'en anything like it. It was built under great i>opular pressure; with nspeedthatwasnever known Itefore; with gold at abont 15(1; withoutanyrailroad reaching the Missouri River, ami with everything to be carted across the prairie. You would have to get Mr. Dillon and others connected with the company in these days to tell you about that. (J. Mr. Dillon and who elset — A. Mr. Blinkendorfer, our engineer, could t«II yon a groat deal, and General Dodge, of course, could tell yon a great deal. (J. Aud the other directors who were diruclors at the timet — A. Yes. I Q. Wlrere are the original records t — A. The original records of the L Union Pocitic are in BoHton. L Q.' Aru the minutes of the meetings of the board of directors there I sleot — A. Yes; 1 presume so. I Q. Ilave you ever examined the minutes of the records of the early I meetings 1 — A. I never have. I will state to you that I do not pretend I to know anything about the Union Pacific Jtnilroad prior to 1880 — prior I to the consolidation. I draw the line there. I have always in8lHt«d that I there must be a period at which you draw the line, and I drew it at the I conaolidatiou. Before that it n^as matter of ancient history to me. I H must take all that occurred prior to some specified date a» occom- ^ plitthed fiLcts, aud, »» that date, I took the year 1880— the time of tiitt; ^M cousolidatiou. Beyond that 1 regarded the statutes of limitations bar-; ^B inff^nin, so fur as 1 was concerned. H eakH for itself. Q. Then the inveatmout for each sinking fund is made in the bondi of the company T — A. In tite bonds of tbo particular company ; yes. The very object of tbo Kinking fund is to absorb the bonds. Q. Are the aiuking-fund accounts over need for other investments.-^ A. No. Q. You are only speaking now of the period since 18S0t — A. They never were, I think. I am speaking of tbe whole time, lint Mr. MIdk can tell yon a great deal inoie tbnn I can about thnt. Going back to that matter of tbe branches, I would say tliat the last computation I bad made, in order to ascertain what our branch system was worth to the Union Pacific indirectly, in the amount of bu'^iuesa which the maio line had which it would not have without the brunches, led mo to the conclnsion that at jtrcsent our branch system was worth to the Union proper about $j,00(),000 a year, entirely apart from anything that ap- pears in the accounts of the branches themselves. CONCERNINd IKTESTHENTS IN OTHER BMTEBPBIBE8. Q. What other interests have yon outside of the Union Pacific 'm uianufaoturing or mining coTnpanies along the line T — A. Wf have coat' mines at Uock Springs, Alma, and Grass Oreek. That, you know, was the salvation of the Union Paciflc; those mines saved it. Otherwtao the Union Pacific would not have been worth picking up. It Hlmck coal. Of eonrse, in the wholly nndevoloped condition of tlic country we had to become coal miners, and at first we mined coal solely forourowu nse. The road ran through a wilderness at that time. We did so, and gradually there grow up a regular coal dejiarlment attached to the road. Then we began to mine for private consumption, asaregular miner, and it has since been a source of large profit. In additiou to that, we are intirested or were interested — I have got rid of several of them — in other mines, and ft'om time to time, iu order to help things along in that country, we have been interested in el»> vators, exposition buildings, &c.; helping them along in those things. (J. Then yon have soda deposits and soda workst — A. Vcs. That was a case where we tried to develop the country witli very jioor hud- cess. There was a lake with large deposits of soda; anil Mr. Sickles came back fmm abroad with the idea tliat there was in lliat deposit a fund of wealth for tlie country and l)usini!as for the road, and he in- duced us to put up works. Since that time we have been running them, because we did not feel like taking the risk of abandoning thenv TJietv is DO proflt in them. CHARLES FKASCIS ADAMSL 83 OOGIDSNTAL AKD ORIENTAL. STKAlfSllIP COMPAXV. Q. I notice the Ooddental and Oriental Steamship Coiii))aiiy ; will joa tell OS about that t — A. It is a profiuble thin^, Mr. Miuk oau tell more about it than I can. The Central PaoiAo people orpinixotl it to ran a line of steamships to Japan, and we took a half intervsu 1 think. That has been a source of profit. Q. Have the investments in manufiietonug and miuiug com|>auie$ t^ A. We never had any iu manofacturing. Q. Have any of those outside miscellaneous investments^ as a rulo^ been successful in producing profits t — A. I think not I am opposetl to them, and the policy of the company is opposed to them ; but t4K\v were rather forced upon us by the unsettled condition of the region through which the road ran. There are two pressures brought to bear very heavily on us the whole time out in that country. One is, as the people say, " To help things along, to develop the country, to lend us a hand." As a rule, when we do so — and we do so with great reluctant^ —immediately the counter feeling comes up, " Why do you put your finger into every pie in the country !" We are denoanceti if we do not do it for lack of enterprise; and if we do it we are denounced for meil dling with things that do not belong to us. I am myself strongly in- cline to confine the company strictly to its legitimate business us a common carrier. Q. Then these investments have been a source of loss t — ^A. Not per ceptibly. As a rule I should say we had made money on them. GONGEBNING THE 5 PER CENT. RULE. Q. What have been your payments to the United States Government under the 5 per cent, rulef — A. Wo have made them every year. Q. In cash t — A. Yes j practically, though there is no money paid ; bat, it is paid in transportation, for which the Government owes\i8, and t^ea, instead of giving us the money, they deposit it to our account iu the Treasury. Q. Then, under the act of 1862, you have at no time made any cash payments more than twice, I think, according to the reiK)rts of the Sec- retary of the Treasury, other than in the credits that have been allowed by the Government for transportation! — A. I think that is all. Q^ How was the amount adjudjred by the Court of Claims paid t— A. That was paid in legal-tender notes. Q. Was it paid in full t — A . It was. THE $900,000 ITEM. Q. Will yon explain to me this item that appears in the report of Mr. Mannmg, Secretary of the Treasury, for the year 1885 1 The item is 1641,000 credit and $200,000 is reported to be in cash. I see no cash payment in your returns. — A. Undoubtedly the rest of that particular item was paid in services rendered. I i-emember, if I recollect right, that I sent up legal-tender notes for $716,000. Hr. Lane. Nine hundred thousaud dollars. The Chaibman. It does not appear there. The Witness. I know very little of the way those accounts are kept. I merely remember that I had to get the money, and I got it, and it was paid into the Treasury) and a receipt for it in full given u%. U. 8. l-ACIFIC HAILWAV COMMI88IOS. Q, Wbo can explain tbat item T — A. Mr. Mink can tell you all about t. Q. There does not, as a inutttT of fact, appear auj wliern in Ibe Unitud Slates Treasnry account tlio pnynieut of any such sum as $!KK),000, the avrurd mode by rlie Court of Claims. — A, It roust appear aomowlierc ; I know «o nmdo tlie payment. Tliure was no cheek given, but the money WI18 deposited in hills at the KUb treasury, for I remember tlie hilts had to he counted ; the auli-lreamiry in Boston. Mr. Lane (to the eliairinan). The part going to the sinking Oind yon did not see; it is stated elsewhere. The VViTNKKM. The total was #917,0(10. The Chaieman. These are the total p.iymeuts showing the amount withheld by tbo Uniled Htates and the credits given, as report«d Janu- ary, 1S87, showing the ciiHh {myinenta and the credits, in which this anm docs not appear. The WiTNESM. I should hnve to refer you to Mr. Mink to explain tbat. Mr. Lank. Wc held on to that moimy, awaiting their division ofthe aaiount between the two acconiits, for a few days. CONCKHNINO INTKBEST OF (H'PIRERS IS Ol'HEB BNTEBPBI8US. (j. I will a^k you a genend question under tbo act of Congreea, whether any of tlie ilirectors, otlieers, or employes are intercstol in any way in contracts with the road f — A. 1 never beard of a caao. (j. You would bear of it if tiueh was the case t — A. t should hoi>e to hear of it. I never lieard of anything of tlie sort. The only way in which an oinpluyi^' has ever been inteiest^d— but no one ever has. I was going tu say, as to those construction contracts, tbat once or twice tsama one iu our employ has been a nominal contractor, lie made a nominal contract with us, for our construction department must bavu some one thn>ugh whom these o|)erattotia aru conducted ; but in such cttsusthey have never beeu paid uuythlug. We simply use their names iu order to transfer the stock and bonds to our treasury. It is a nominal service. Q. There is no profit T — A. No profit whatever ; not a dollar. Q. Speaking since 1880, has the road loaned or invested its sinking fund money in any way ! — A. No. What sinking fund money! Q. Sinking funds for bonds! — A. You mean the Thurnian act sink- ing fund ! Un that the (jovorninent gave us 2 per cent, a year. The Chairman. You buve established a sinking fond to which yon carry different sums from time to time, and out of which you make iu- Testmeuts in order to accnmulatu to meet them at matnrity. The WriMEss. The trust companies do tbat. Tlie company hasuotli- iog to do with it. I think it is always a trust company now. I do not think we have a single casu of trustees. Oh, Mr. F. L. Ames is the trustee under the landgraut mortgage. Tbat is an exception. But lie cannot make any investments whatever. He is prohibited from doin^ 80. Be can only deposit the land money with a trust company in New I York. H Q. Where do you carrj- the proceeds from the sale of land ! — A. Itgoea I to tbo trustees. All of it. The oompany has nothing to do with it. H ay us 3 per cent, interest, or whatever it is, but the money itself goes into the general investment account of the trust company. DIVIDENDS. Q. When was the last dividend of the road declareil t — A. It was de* dared at the meeting held in March. I8S4. It was paid the 1st day of April, 1884. Q. How do the earnings of 18S5, for the purposes of di\idends, com* pare with 18841 — A. They fell off. In 1883 everything came on the Union Pacific at once. Before that it was earning enormously ; but at that time the ]^orthern Pacific was completed through, which affected us very severely on Piicific coast business and on Montana business, very severely, indeed. The Denver and Bio Grande was completed through to Ogden, which affected us on business to Salt Lake. At the same time the Southern Pacific was completed through, which affected us on the business to San Francisco and the Pacific. And almost at the same time the Horn silver mines ceased to be productive. The re- sult was that our business fell off, if I recollect right, $4,000,000 in one year. At the same time our rates were reduced and our expenses were necessarily increased. rSB OP NET EABNINGS FOE CONSTRUCTION OE TO PAY FLOATING DEBT. Q. What disxK>sition did the company make of the proceeds of the profits or net earnings of that year ? — A. What was left of the net earn- ings of that year, alter the Oovernmeut was paid (which would have been applicable to dividends), was devoted to paying off the floating debt of the company and restoring its financial situation. Q. Was that the case with the year 1886, the year just passed f — A. Tea. We were forced last year into a certain amount of construction and development, and that was the only fund we had to apply to it. It is 60 stated in the report of the year. Since I have been in charge of the Union Pacific we have put $16,000,000 into the property; and we have raised that money, or about lialf of it, from net revenue, which would have been .applicable to dividends which the stockholders went without; and the other half of it came from the sale of securities, the quick securities in our treasury. We turned them into cash, and put the proceeds into the business. Q. Then the net earnings or profits of 1885 and 1886, which are nearly ftboutthe same, have all gone into the improvement of the road t— A All gone into the general improvement of our property and tlie pttflK of ^ ^aatiog debt I n. 8. PACIFIC RAII,WAV COMMISSION. Q. Where would that appear in your balanco-shcet T — A. Yoa mil fltid it in detail in the annual report of this yi>ar. Q. la thatstatemontsctout in thebntanc^-8bc«t,8howiDg theinoFAase of investmentsfroratimetotiroo! — A. Yes; in our inTestmentacoonnt. You will And it there orery year. DBCEEASE OF ASSETS. Q. Tbe investments as tlipy appear in 18S4 are *4G,000,000 in total, and in 18SS aro only $40,00(1,000, us reported in the total investuicut account. What is the nmseof that d»!ereasel — A. There weri? $4,000,- fiOOor J "1,000,000 in Saint Joseph and Grand Island Itonds that wuru solcl. The aiiconnt has been iiicreaseil from some Honrees and diininlMheil by the sale of quick assets; ho the amount you name is the net di.>€rciu«>. Q. [low much of thin went Inio Iho construction account of tbid $1(1,000,000?— A. I should have to look to llio report of this year to tell you; but it is slatoii Ihcre. (J, VVjis there a largo amount T — A. A very large amount. Tbe Ou AIRMAN, i call your attention to the fact that in 1883 or 18S4 the constrnctiou account tolRl was $108,918,(107.04, and in 188(t$ltll,- 2S3,fl88.m ; so that of the «1«,000,000 net earningH of the three ycara, or two ycara. only 8.'i,(KiO,0(MI went into tbe construction account. Tho Witness. That was the construction accxinnt of the Union Pa- oiflo proper. The Chairman. This is for the Union Pacific system, the railway company. The Witness. Ts it tlio railway company proper, or tho system t Tho (jnAiKMAN. Vl's, sir. Tbe WiT.NBSS. Tho company proper is one thing; the sytttuin ia another. Tbe Chaibman. U is the railway company. The Witness. Then %'«ry likely $3,000,000 wont into constrnctioii. That was repicHeiUed in all kinds of thiuEs— equipment, and improved appliances, and bridges, and evorylhing. We had (o rebuild the Omaha bridge, among other things. Q. Uf that $H],000,()00, you have put into this Union Paelflc Railway Company about $.i,(HH>,0(io in the coustrnetiou account, iu iuiprove- ineots 1 — A, Yes. PAOIBNT op FLOATING IiEIlT. Q. Where did tho other go I — \. Then there was a debt we had to pay off. We paid off a debt of $1 1,000,000, I think it was, a floating debt that tho company had when 1 took charge. 1 mean bills payable. Our bills payable amounted, If I n'collect riglil. lo ahotit that. Then a large portion of that money we paid over to thi' (inMininenl, tj. I call your attention to the fact iu tho 8;ii]ii' iipm I ..I' the liabil!> tiea, tho general balancusheet of the Union PaiMlii: (Jnrnp^uiy. that the net floating debt was $308,000. — A. lam now .'^peaking of oilla pay-' able. That is a different thing entirely. The bills payable outatttDU- fng really represent tbe floating debt of tho company. FLOATING DEBT OP 1884. TiisCnAinytAN. It appears in the rcflort of Vfta4tUa.tt.U« floating debt tFas $J0S,513. CHARLES FRANCIS ADAMS. 87 The Witness. That is a mistake, somehow or other. You are wrong there. The Chatkman. Very well, we will get the reports. The Witness. We never had any such diminutive floating debt as that in 1S84. The Chairman. The report of the floating debt is $1,861,000. The Witness. I do not know where you get those figures. The Chairman. It is from your reports. Mr. Mink. You might look at page 81 of the report of 1885. The Chairman. I call your attention to the liabilities in the Union Pacific Railway Company's balance sheet, page 79 ; floating debt, •12861,445.44. The Witness. When is that! The Chairman. The year 1884. The Witness. Is that the floating debt t The Chairman. Yes, sir. Mr. Lane. Tou will find on the next page the details of that. The Chairman. I call your attention to the other difference of the floating debt of 1884. The Witness. There it is, yes, sir; $1,801,000, which had been re- duced then from $7,000,000. The Chairman. It was reduced from $3,237,696.53. The Witness. The floating debt touched its highest point the 1st of Jaly, 1884. Q. That was $3,237,696.53 1— A. It was a great deal more than that. The Chairman. I call your attention to the balance sheet. The Witness. That is December 31; I say June; it ran right up there to June. The net floating debt on June 30, when it attained its highest point, was $7^800,000. The Chairman. What have you to say in reference to the $308,000 of floating debt t The Witness. Is it not $3,000,000 ? The Chairman. No, sir ; $308,000. The Witness. When was that t The Chairman. This is the year 1883, where you deduct. The Witness. They deducted material on hand in that account. We have never done it since. Q. It appears in your account as a floating debt, $308,000, for that year, does it not? — A. Yes, sir; I see it. We never deduct material on hand. Q. I want to call your attention to this fact, that in the accounts of 1881 to 1886 fuel and material appear in all the years except 1883 and 1882. Why were they omitted then ! — A. I am surprised that they did 80 appear. I did not know that they were omitted. What is more, I see in the table they have here it does not appear. It is contrary to my orders. Q. 80 that they ought to appear in every year t — A. ]^o ; they never shoQid appear in any year. The Chaibman. 1 call your attention to the amounts where they ap- pear in 1880 to 1886. The Witness. 1 directed them to be left out in 1884 and never put back again. I thought they had been left our, and they are left out kre, 1 have not had a chance to examine those papers, so that I can- not tell what they are. Mr. Mink would have to account for them. The Oh AIRMAN. 1 want to call your attention to this lepottlieis^ \ iA!^ MtfjBoteiiaL 88 U. S. PACIFIC RAILWAY COMMISSION. The Witness. That is not floatiDg debt. That is a different thing. That is not included in our floating debt. Q. I want to know why these items are omitted in these reports in the years 1883 and 1882, and they appear in every other yearf — A. I cannot tell you. Mr. Mink will have to explain that. They ought to appear in the general balance-sheet. Q. Have you any items, miscellaneous accounts or legal expenses, that appear in any of the books since 1880, where there are no vouchers for each item of payments t — A. 1 think not. Q. All your items, then, since 1880 are vouched for, with vouchers on file t — A. I cannot speak tor 1880, but since I have been in charge they are— that is, since 1884. I supposed they were before that. Mr. Mink knows; 1 do not. I think our vouchers will stand a great deal of in- vestigation. HOSTILE LEGISLATION. Q. On the question of hostile local legislation, I ask you, generally, up- on that question, to what extent has hostile legal legislation affectea the working of the Union Pacific along the linef — A. They have affected it quite seriously. That is, in nearly every State — at any rate in Ne- braska and Kansas — there have been laws passed which have arbitrarily cut down our rates. And then, in a new country like that, and espe- cially with a railroad like the Union Pacific, it has to bear a most inordi- nate share of taxes. Our taxes amount to $ 1 ,100,000 a year ; much more than they would be in a thickly settled country. Q. Has there been any legislation known as hostile legislation that affected the Union Pacific? — A. I do not think there has been any. The legislature of Kansas commenced quo warranto proceedings against us on account of the consolidation ; but those were settled long ago and the proceedings withdrawn. They are always threatening legisla- tion and making us uneasy ; injurious bills are constantly being intro- duced ; but I do not think it has taken the form of actual legislation. At least, if it has, I should have to consult as to particulars with our officers on the spot and inform myself more accurately. Q. Then you do not know of any hostile legislation that affect^i (he general interests of the road? — A. No, except in the particulars men- tioned. LAND GRANTS. Q. Has the United States anywhere aided any of the com))eting lines of the Union Pacific ? — A. They have given them very large hind grants. Q. What lines? — A. The Atchison, Topeka and Santa Fe had a laud grant from the State of Kansa^s; the Northern Pacific had a land grant, which we all know about ; the Chicago, Burlington and Quincy, or the Burlington and Missouri, in Nebraska, had a very valuable land grant from the State of Nebraska, and the Northwestern and Elk Horn. There have been land grants to nearly all the roads, as well as to our own. Q. I am speaking of the United States land grants to roads that* com- pete with you ; you can speak as to the effect of the competing lines upon your roads, can you not? - A. Yes, very decidedly ; I have reason to; 1 have a realizing sense of that; everything in relation to land grants is a matter of record, and my evidence will be of little value. The Chairman. 1 do not know that I want to go any farther to-day. CHARLES FRANCIS ADAMS. 89 Tl:c Witness. I will be here at 11 o'clock to-morrow, and I shoalil like to have my examiDation finished tomorrow, as I mnst go to Omaha as soon as I can get away. The Chairman. Very well ; we will adjourn until tomorrow at 11 (/clock. The Commission then adjourned to Friday, April 29, 1887, at 11 a. m. No. 10 Wall Street, New York, FHday, April 29, 1887. The Commission met pursuant to adjournment. Present: Commissioner Pattison (chairman), and Commissioner An- derson. CHARLES FRANCIS ADAMS, being further examined, testified as follows: The Witness. Before I proceed further I should like to say that I notice in looking at the papers that there apparently is some disposi- tion to comment upon my statement made yesterday that I never per- sonaUy looked into one of the books of the accounts of the Union Pa- ckc I desire to explain. I am not a book-keeper or an expert in book- keeping; I do not pretend to any knowledge of book-keeping proper; and as, Governor Pattison, when you were governor of Pennsylvania, yott never, I presume, looked into any of the books of accounts kept in the treasurers office yourself, so it has been with me. 1 have called, and do call continually, for summaries direct from the books, and hardly a day passes that I do not call for them; but when it comes to going to the books themselves and examining them in detail, I could not under- stand them if I did, for I do not know enough of book-keeping to ena- ble me to go into them intelligently. It is a foreign language to me. Every day in the practical work of my office the comptroller comes to me with his report. He takes my Instructions in regard to how charges shall be made; and 1 call on him for summarized statements, drawn from the books, of whatever I want, whether bearing on the operation of the road, financial conditions, or anything else. 1 take these sum- maries as he brings them to me, and I must necessarily do so, for the books are too complicated for a person who does not make a regular business of book-keeping to look into them intelligently. I am not enough of a book-keeper to pretend to go into the books of the Union Pacific myself; I must take them from others in whom I have confi- dence, those who have the control of them. OMAHA, NEOBBABA AND BLACK HILLS RAILROAD. By Commissioner Anderson: Question. The last one among the operated branches that we have examined about was the Omaha and Eepublican Valley. The next branch as to which I will ask for an explanation is the Omaha, Nio- brara and Black Hills Railroad Company. — Answer. That is a branch extending from the main line of the Union Pacific in a northerly direc- tion in Eastern Nebraska. It is an agricultural road. It has since been consolidated and is now a part of the Omahai and B^\>\>b!&iA!SL y^efBailway Cowpany, which I explained yesterday • U. 8. PACIFIC RAILWAY COMMISSION. ^^H Q. What, is tbe cliaractprof its opcratiou! — A, An agricultnral rood. Q. What has beeu its history in regard to payiiiftt — A. It has beea in connection with the Union Pacitic a profitable! road. Q. That is, taking its own operation in connection with the operation afforded to the main line? — A. Yes; we have a very large constrnctive mileage Item the roads east of us, which in the cAse of this road roakeH it a proiitable road to the Union Pacific, C0N8TEU0TIVE UILSAQE. By the Chairman: Q. In constructive mileage does the branch road receive the benefit! — A. No; tlie Union Pacific n>c(?ives it from the roads east of Omaha. Commissioner Anderson. Wc had better takeeach subject by itself. The Witness, It is a complicated subject, and 1 think you will have to take that up by itself. By Commissioner Anderson; Q. In regard to this road, you say it has become part of the Omalis and Republican Valley R^steni t — A. Yes. Q. And that system, if I remember right, you stated now embrace* about five hundred miles of road! — A. Justabout; 408 miles. Q. And yoar explanation given yesterday includes the explanation that you desired to give in regard to the Niobrara branch T — A. Yes. THE ORKHON BIIOHT LINE. Q, I Und the next company or branch is the Oregon Short Line Rail- way Company. Please state where that leaves the parent road. — A. It leaves it at Granger, about 180 miles, if 1 recollect right, east of Og- deu, Q. Can you indicateon this nmpf — A. I can ; it is marked there very distinctly. Q. That is Granger [indicattngon the large map] T — A. That is Granger. It rons up to the border of Oregon and ends at Huntington, where it connects with the Railway and Navigation Company. Q. At this point it uonuects with what [indicating] t — A. At Hnot- ington with the track of the Oregon Railway and Navigation Com- pany. Q. And that makes connection with Portland, OregonT^A. With Portland, Oregon — Washington business. Q. Is this a proposed extension t — A. No; that belongs to the Ball- way Navigation Company. It is already built. We connect now and run to Portland, Oregon. Q. That is the line between Huntington and Portland t — A. No, not Portland ; Umatilla. Q, Is this [indicating] the Oregon Navigation Company t — A. No; the lower part, running south, belongs to the Central Pacific. (J. This is the Oregon and California 1— A. Yes. The Railway and Navigation Company ends at Portland. Q. And the yellow line is the Northern Pacific system t — A. That Is the Northern Pacific. Q. When was this Oregon Short. Line first thought off — A. About tbe^ear 1881, 1 think. It was incorporated in 18S1. CE[ARLES FRANCIS ADAMS. 91 ITS ORGANIZATION AND CONSTRUCTION. Q. When did tbe coDstruction commence t — A. It must have com- menced, I think, in the fall of that year. It was completed in 1882— two years before I took charge as president. Q. When did yon say it was finished t — A. Oar road was finished in 1883, I think, bnt the Eailway and Navigation Company did not connect with OS nntil after I became president ; that is, some time in Decem- ber, 1884. When I went over the road in the sammer of 1884, immedi- ately after I became president, I went to Hantington. Q. What information can yon give ns as to the origin of this scheme of making this connection ?— A. That is a matter that others are far more familiar with than I. It naturally suggested itself. The theory of the construction is obvious. It was then supposed that the Northern Pacific was in such a condition that it could hardly be extricated from its troubles. The Washington and Oregon business was a very valua- ble business, and the directors of the Union Pacific conceived the idea of securing it by means of the Short Line. Q. With the Washington system t — A. With the Washington system of roads; not expecting that the Northern Pacific would be completed for many years. Then Mr. Villard suddenly appeared upon the stage, and the Northern Pacific was in fact completed first, which quite de- ranged their plans ; and then the Oregon Short Line was completed afterwards, making an equally short line with the Northern Pacific. The two lines are of the 8ame length. Q. Please tell us who the parties were who were originally interested, and most prominently, in this scheme ? — A. There was no one most prominently interested in the scheme. The plan for building the road was the one ordinarily adopted, and adopted by all the lines, so far as I know; moreparticularlj', recently, the Atchison, Topeka and Santa F^. It was proposed to build this line in connection with the Union Pacific. Tbe charter was obtained from Congress as a sort of a child of the Union Pacific, and the right to subscribe to the securities was publicly oficred to all the stockholders of the Union Pacific in proportion to the stock \rbicb they helcl. There were no reserved rights. The rights stood at a premiam. The whole of them were subscrit^d for by the Union Pacific stockbolders, and the money was called in on the subscriptions. Q. Hy question addressed itself to the period prior to that. I want to know who the men were who were the advocates of this scheme of constructing the Oregon Short Line. — A. I think all the directors were convinced of its desirability. Q. Wti8 it the unanimous opinion of the whole board that it should be bailt? — A. I think so. I do not think there was any dissenting opinion about it. I did not belong to the board then. Q, Was that before you were a director t — A. It was before I had any- thing to do with the company in any way. Q. Not before you were a stockholder f — A. I think it was before I was even a stockholder. Mr. Holmes, who is better informed historic- ally than I, tells me that it was started as early as 1876 or 1876. If so, it was long before I had ever been near the Union Pacific. Q. When were these rights to subscribe to the securities of the Ore- gon Short Line offered to* the stockholders of the Union Pacific f — ^A. That is matter of record, but I think it was in 1881. 0* That is about the time you began to be interested in the company t —A. I had some stock then. I forget how much. 1 boug\iti ^ \v^dM6 stock. U. S. PACIFIC RAILWAY COMMISSION. Q. How was tliat road nctimlly bniU. ; by Ibo construction depart- ment of llie Union PaciHc T— A. Yen. Q. HnvL' you cupicH of tde contracts for uoiik true tion 1 — A. Tlicyare on lilu. rush is found the soil is rich. Tiicre are now great schemes on foot for irrigating that region. I regard Idaho as thu ino»t promising region the Union Pacific uow has open to it. It has the most promising future. The Territory is full of schemes for irrigating, and wherever you have siige brush like that, water will turn the coun- try into a garden. Q. Is it UHturally a ))rodnctlve country without artificial assistance T — A. Oh, no ; no more so than Colorado. Q. Then there are no earnings derived from the productions of that particular section at present! — A. There are a few catlle that graze there. That is all at present. Q. When was this construction actually commenced 1 — A. I think the constructioi) must have been begun in 1880 or 1881. Q. When was the road opened for actual operation t — A. Th« road was opened early in 1882. That is stated in our report, Un page 48of that report you have in your hand you will find it. COST OF OONSTEDCTIQN. Q. Do you remember the rate of construction per mile t — A. On that road I Q. Yea— A. My impression is it cost between ?20,000 and #25,000 per mile. <;. That includes the land t — A. Everything, Q. The grading! — A. Everything. Q. Not the equipment t — A. Yes. The road could be built for less money today, liccause everything has since then gone down very ma- CHARLES FRANCIS ADAMS. 93 BOND AND STOCK ISSUES. Q. How mQcli is that road bonded fort — A. Twenty-five thousand dollars a mile. Q. How mach is the stock per mile t — A. I think it is the same. Q. Did I understand you to state that the stock and bonds were both satecribed for, the first option being given to the holders of Union Pa- cific stock f — ^A. They were all subscribed for by the holders of Union Pacific stock. Kot all the stock and all the bonds. One-half the stock and all the bonds were subscribed for, in blocks. By the Chairman : Q. Did the Union Pacific guarantee the bonds? — A. No; the Union Pacific guaranteed the payment of interest on the bonds, under a traf- fic guarantee. By Commissioner Anderson : Q« You say one-half of the bonds f — A. All the bonds. Q. All the bonds were taken at par f — A. I do not know. These blocks were subscribed for by the stockholders. A block would con- tain the bonds and stock, and they were all subscribed for. Q. The point I want explanation about is that the par value of the stock and bonds is $50,000 a mile, and you state that the construction was $25,000 a mile. — A. Twenty-five thousand dollars: yes. One-half the stock' was retained in the treasury of the Union l?acific, in order to represent the control of the property. Q. And that is there still? — A. It is there still. Q. What were the terms of subscription to the other half of the stock f — A. They will speak for themselves. I have not got them. Q. The cost of your road as entered in thi« balance-sheet is $2G,000,- 000, and your statement that $25,000 a mile covered the entire cost would only give us $15,000,000 for 010 miles ; so that there must have beeu other things besides. — A. There were 40 miles more on the Wood River branch. Mr. Lane. That is included in the 610. The Witness. We have not got $25,000,000 of bonds out on that Une. We have only $15,000,000 of bonds out. Q. Twenty -five thousand dollars a mile for 600 miles would give you $15,000,000. — A. That is the exact amount of bonds we have out. Q. The cost of your road, as stated in the balance-sheet, to balance both half the stock and bonds, is $26,000,000.— A.. That is right. That includes the stock that went out with the bonds. The way it was sub- scribed is this, if I recollect right : A thousand dollars in bonds and five shares of stock Q. Five hundred dollars in stock ? — A. Yes ; was given for every thousand dollars subscription. That is my recollection. Q. Then the stock went with the bonds, without any additional [)ay- ment in money! — A. Yes. Q. And the statement in your balance-sheet of the cost of the road is made so as to balance that issue, and without reference to the actual figures of its cost! — A. The actual figures of cost were different ; but that is what appeared on the books. YALUB OP OREGON SHORT LINE TO UNION PACIFIC. Q. What has been the operation of that road since 1882 as tc geoeralgaestioD of paying its expenses f — A. The road Uaa a\wttS1 U. 8. PACIFIC lUILWAY COMMISSION. its expeimea and uurtied u very uoiishlerablu Eurplus, bat not saSicieDt uj) to the preseut lime tfl pay tbe entiro interest on the bouds as it accrued. We can give yon the tiRurea of that, Q. Has the operation of the road iiuprovcd from year to year f — A. Steadily. Q. Of what degree of utility is thia road to the Union Paciflo as u feeder f — A. Very great, in my opinion. The Union Pacific lias 800 miles haul on every thiug that goes to or comes from that road ; 850 intles, or 860, r think it is. • Q. What proportion of the traffic that goes over that road and pftsses Granger lias come all the way from Omaha t — A. Nearly the whole of it, except coal, &c., which conie» froui our mines at Bock BpriugB, aiid Bome which comes from Salt Lake. CUAHACTER OP UUSINESS DONE. ' Q. What ia tlio character of the freight that is carried all the way from Omaha to points on tbe Oregon Short Linof — A. It wouhl beini- , possible for mo to say. It is miscellaneons fVeight, going to Portlaod* and Washington Territory IVeighl. Q. Can yon not give me thepromiuent items f — A. No; Ishouldha\'e to call for them. There is everything on earth. It would not be |kw- sible for me to specify. Everything that passes across the coutiiieut — trauscoutineulal busines-t. Q. Can you tell me anything in relation to the proportion of freight or ti-alliu that terminates on the line of the Oregon Short Line as com- pared with (hat which goes beyond, to Portland and points beyond Huntington t — A. There is a large business which goes over the Oregon Short Lino up into the Wood Utver country, and comes back from the Wowl River country ; this is mineral. Stuff of every description goes iu. The iieople there raise nothing; they depend upou us to carry them everything. They send out the prmlncls of their miues, and that goefl over the lino IVont ShoHhone. Then the lioist^ City business is of a luJs- cellaneous character. You could get that Information much better by examining our freight agent than by examiiiing me. Q. Please give us Ihe name of the freight agent. — A. Mr. P.P. Shelby would be the proper person to examine on that point — of Salt Labe City. lie is thoroughly informed. Q. Wliat is tbe population that may be said to be tributary to this, Oregon Short Ltnet — A. I could not tell you. Q. Ingeuerul terms, it is very sparse t — A. It ia very sparse indeed along the line of the Short Line. Q. Are there any sjieeial settlements of any magnitude along tbe line of the road T— A. >'o, except BoisiJ City. That is at the western cud of Iho roiid ; and there is a series of towus springing up along SnitkA liiviT. There is a surprising degree of activity yon will see a** yoQ go over I lie line, ii. TIk- population is, in your judgment, increaeiugt — A. Very repidlyj. very nipiilly bnleet). As I say, I regard Idaho as the most promhsing- ■ field of development — undeveloped Held — that the Union PaciBc now bas. I nm very sanguine ni regard to the future of Idaho. Have you over been over the soctiou of the Central Pacific whiol r tbttir Oregon connt-otiou, wWcU iVtj's ca\\ tt\e daX\\oTiA». vu \ CHABLES FRANCIS ADAMS. 95 Oregon f — ^A* I have never been over that line. It was never completed ao that I ooold go over it. I shoald have had to stage it « Q. Do you know anything of the character of that country with refer- ence to the difficulty of construction as compared with the character of the country through which the Oregon Short Line goes! — A. I am under the impression that it is much more difficult of construction. Q. Does that apply to the whole section from Bedding to the north line of Oalifomiat— A. I cannot tell that. The region that I speak of is where the line crosses the Cascade Mountains. I have heard of that; I have never been there. I want to say, in regard to the remark that I just made that the Ore- gon Short Line could now be built for much less than it was constructed foTj that that is true of every railroad in the West that was constructed in the year 1881. Since that year the prices of material have gone down, so that it is safe to say the road could now be built for 30 per eent. less than it was built for then. Q. Thirty per cent, f — A. I think so ; it is safe to say that. GUABANIEE OP H^TEBEST BY UNION PACIFIC. Q. I think yon stated that the TTQion Pacific had guaranteed the pay- ment of the interest on the Oregon Short Line bonds f — A. Yes. Q. When was that action taken t — A. That action was taken at the time. It is a matter of record. Q. At the time the bonds were issued f — A. At the time the bonds were issued. I am informed that January 12, 1882, is the date of the agreement. Q. Was it reported by the Government directors to the Washington antiioritiesf — A. I presume so. Q. You don't know f — ^A. I don't know. Mr. John F. Dillon. I know it was. The Witness. Judge Dillon can tell you about it better than I. Mr. John F. Diixon. There is a record of the correspondence with tbeOommissioner of Bail ways on the subject. WITHOUT THE CONSENT OP CONGBESS. By the Ghaibman : Q. Did you obtain the consent of Congress to make the guarantee? — A. Oh, DO. It was not covered by the act of 1873, our counsel advised us. It was made under advice of counsel. By Commissioner Andebson : Q. Who was the counsel who so advised t — A. It is on record. Sid- ney Bartlett, I think, Judge Dillon, and Shellabarger & Wilson. I don't know whether Mr. Holmes advised that or not. Q. All the counsel whom you have named advised you that the guar- antee was within the limits of your powers and did not require the con- sent of Congress! — A. Yes. Q. Was tibat the precise question that was submitted to counsel, as yon remember f — A. I had nothing to do with it. It was before my time. 1 am merely speaking now of things that I have heard. The Ohaibman. The act of Congress provides — I call your attention to it in connection with that question — that no new stock shall be issued or mortgages or pledges made on the property or future earnings of t tompany without leave ofCongrea8. U. 8. PACIFIC RAILWAY COMMISSION. The Witness. My nttentiou hua been called to tbat inHuy, maay tinius.. It has beeu uuder loni; aud careful c(iiisieaKing of the last four years. — A. 1 also am speaking the last four years. The Union Pacific during the last four years ll_ made money out of the Oregon Short Line — most distinctly and emphaK ioally made money out of it. Q. Htill the earnings that are required to make np the amount quired for the interest have to be taken from the earnings of thn llnfod I'iiciflo, which are not the local earnings of the Oregon Short Lino. — A, Not the locnl earnings of that line, but still the earnings of the Unir^^ Puoitli; from basiuess derived from the Oregon Sljort Line, whicb Nover Mould Imve bad if the Oregon 8\iOTV \An CUABLES FBANCIS ADAMS. 97 Q. Does not the deteriniiiatiou of that statement requii*e the exami- nation, and the close examination, of the derived business which the Ort*gon Short Line furnishes to the parent line in order to ascertain tuat the net advantage from that business is equivalent to the defi- ciency f— A. Undoubtedly it does. Q. And your statement is that after such examination you dechire that it was more than sufiicient to make up that difference ? — A. That is my statement. Q. Have you those statements in writing! — A. No; I have called for them from time to time, and they are made up for me. I stated 3'ester- tlay that the Union Pacific, as far as I can now ascertain, derives about $5,000,000 a year of profit from the branch line business which it does; not, yoa must observe, from business done over the branch lines, but ^m branch line business done over its own lines between Omaha and its branches, and this Oregon Short Line business would be included in it The Union Pacific has a haul of 800 miles on the Oregon Short Line business, and business of that description is the most profitable business a railroad can do, without any exception. I should like to enlarge on this a little, because there is a very great misconception on the subject. THE LONG HAUL. The business a trunk line does for its branches is its most profitable boriness. All it does is to hitch a locomotive to a train of cars and haul that train 860 miles in the case of the Short Line ; it then turns it over at Omaha, if it runs East, to the Chicago lines ; or at Granger, if it goes West, to the Oregon Short Line itself; and then another locomotive is hitched on b}^ the connecting line and the train is pulled off. It is a basiness upon which it is safe to say the profit is larger than on any other possible form of business which a railroad company can have ; and it can be done at a lower rate, and therefore when you take an ex- tension like the Oregon Short Line, which receives whole trains of loaded can every day which are simply hauled and turned over to it, the busi- ness can be done by the parent line at a wonderfully low figure. Q. You have to pay the same wages to the brakemen and the fire- men on the trains f — A. And that is all. Q. Yoa have to pay for the wear and tear of the wheels f — A. Yes ; bat that is trifling. Q. Do you have to i*epair the track t— A. You have to repair your own track; you would have to do all that, you know, even if these trains did not ran. BAILBOAD OPEBATION DESCRIBED. Q. Is it not absolutely true that the wear and tear is directly propor- tioned to the number of trains that pass over a road ! — A. Not by any means; decay goes on just the same whether you are using a track or not. Decay is what affects our ties, which are such a large element of expense, and our bridges, and it goes on just the same whether you are using your road or not. So of care of the road. The thing that makes the expense in handling a railroad is the delay of your cars at local sta- tions on your road. For instance, a car is hauled 20 miles out of Omaha on the Union Pacific proper ; it has to remain there three days to be loaded and unloaded, and the wheels are idle. Tou take the cars that are going to the Oregon Short Line and the wheels are turuiugui^Vit wid. df^ eanuDff money the whole time. No one has to \)e al 11^^ \Q^aSL ita^ 7p s U. 8. PACIFIC RAILWAY C0MMIB8ION. tioii to hmidlu ttie fm^tit ; tliuro is aothiiig to l>e iluiiu bnl Httuply bit^ih ii lo(»>m»tivu oil iiiid iitilt a full triiiii SUO niilcn. Q. Is it nut trne tliut at curtiiiii rates of fmi^lit tliu mi)UuH of a hviglit train U a loss to the road instead of beiug »ii advantage T — A. niiiloulitedlf. That, bowever, euuuot bo flxod ; it dqicDds npon tba rlana of bneinosa. Q. Are the ratos whicb are paid fur Oregon Short Liao fVoigUt, an ap- plirablti to the Uoiou Pacific portion of tbo line, remunerative rates 1 — A. I cAunot tell y.ou. Uecently my attention was ealUnl to the fart tliat tlic business during one month was being done at a remarkably low rate. My attention had not been called to the fact previously, and I sent ont to inquire why it was. 1 take it that it waj4 some local disturbauus which could be remedied, lint we have a regular through transcoutb nental rate; the same rate that the Northern Pacific has. Q. Compaiing together branch mads which have been constructed by n nystem like tbo Union Pacific and branch roads which are conatrauteu by the enterprise of the people themselves who deairo to develop a given region and to make a connection, why is it better to have (be parent ruilrowl do all this workT — A. We would be Ter>' gla«l, in most ciwea, if such an arrangement could be made. There, as a rule — what hoH been so strongly criticised — the construction company comes in. It has been suggested to me repi>atedly that the only way for the Union Pacific to overt'onio the difliculty was for the directors to build all these roada and lease them to the main line. 1 have stutwl that tliat did not eeem to me to be sound policy. That is what you suggest I • Commissioner Andeuson. No, sir. The Witness. That is what it all comes to. The money comes from- the East. It is put into tbo branch, and the branch has to be oonnectM with the main line ou some terms, Commissioner Andeuson. I presumed there weresomeciti^enauf the United States who were not directors i>f the Union Pacific who might lie Interested in such enterprises. The Witness. Undoubtedly; but I do not think such a case probablu. Wo have hud some lines built in that way, but the profit on the busi- ness always does and always must go to the main Unes. Q. Are there not many branches of Kastern roads that have lieeu built by local enterprise, in which the main road has had no oonueo- tion whatever!— A. 1 think wherever it has been done you will find that the road has ultimately been leased to the main lino, because it can be operated much more economically as a leased line or as a part of the main system than as an independent road. VALUE OP BUANCn LINES AS PBBDEB8. Q. What I refer to particularly is this, that where a great systfim like the Union Pacific is anxious to develop itself by the constructloa of branch lines, is there not danger that in the desire to hasten the de- velopment of the road they will run ahead of the development of the country and eoustruct lines before the period comes when tliey will bo remunerative!— A. That is the history of all railroads in the United States; lines are constructed before they are remunerative; but they an constructed much more quickly in connection with amain hne, and macU more economically and profitably than they can be when they are *Mjn. Btructed independently. Q. The result of the history of tlie couaUvicUou wt souv branch linea ja that in a /arg-oanmbcr of instances l\\e5\ia.v« uQtVwftiitoraA\«'ASM CHARLES FRANCIS ADAMS. 99 ble ; is not that so t — ^A. I think that generally, with very few excep- tions, they have been fonnd profitable in connection tcith the main line. It 18 there the econoniical question comes in. The business tbey briuj? is to the main line new business. For instance, if we build a Hue 50 miles long from Granger, the business comes from or goes tq the Eiist, and we have a haul on it not of 50 miles, but of 850 or 900 miles. The haol of 50 miles has no profit in it, but if you can do that same business and haul it 850 miles there is a very great profit in it. It is the length of haul that makes the profit Q. As f^ as the Government interest is concerned, I understand yoor proposition to be that the amount of 25 per cent, of the net earn- ings'of the Union Pacific, or of that portion of the Union Pacific which has been aided by the Gk>vernment, reaches a larger figure under the actaal operation of the Oregon Short Line than those net earnings would reach if the Oregon Short line did not exist? — ^A. Unquestionably. It does not admit of doubt. Q. We would like a table of that specific information. — A. You shall have it. In my opinion, speaking without the card, I do not believe that the 25 per cent, of the Government to-day would aggregate more than half what it now aggregates if the branch line system of the Union Pacific had not been built. LEASE OP OREGON NAVIGATION COMPANY TO OREGON SnORT LINE. Q. To return to the Oregon Short Line : I notice that within a few days a lease has been made by which the Oregon Navigation Company has become lessee to the Oregon Short Line. Will you please state what that transaction was! Mr. Dillon. Lessor to the Oregon Short Lino. Commissioner Anderson. Lessor to the Short Line. It has leased itself. A. It was a negotiation which has been going on for two years and which was brought to a close last week. We were delayed in coming to a dose earlier owing to the difficulties which the lawyers found. The heads of an agreement had been reached long ago, but the lawyers threw so many difficulties of one sort and another in our way that we codd not consummate the thing. Finally we got a law passed by the legislature of Oregon (both the Short Line and the Navigation Com- pany's tracks being corporations of Oregon) authorizing the lease, and that removed the difficulty. The lease was then made. Q. Will you please furnish the Commission with a copy of the lease f — A. Certainly. Q. What are its general terms ? — A. The usual terpis of a lease. The property of the Navigation Company is turned over to the Short Line, and the Short Line guarantees the payment of certain sums of money. We have complete possession, just as if wo owned it. AMOUNT OF rental. Q. The Short line guarantees the payment of the interest on the bonds of the Oregon Navigation Company! — A. Yes. Q. And what per cent, on its stock t — A. Six. Q. Do you know the amount of the stock t — A. Twenty-four million dollars. Q. And the amount of the bonds f — A. The amount of the bonds I cannot now give you. The whole amount of the reiital 'wWV \j^ ^iMaib 02^,mayear. U. 8, PACIFIC RAILWAY COMHI8HION. Q. WliHt iisiiitiiaatioa have you made of tbo uut unriiiiiffH of tlio Oro' f^uu yiivigution Ooinpaiiy for tlio past tbreo or four yoarsT — A. I bave \ beoii prelty uoDHtautly viigaj;fi(l on it. Q. Will youfiiruisb us with reports of that company T — A.. Oertaiuty. I would rather give you the exact figures iu these matters thau Ktate my memory of them. I eannot pretend to carry all theae items in my miitd. I e»n only giro them generally. Cj. We only want your Judj^ment as to how goole,from whittyouknowof tliebOMtuvM done by the Oregon Navigation Company, that the burden on the Ore- gon Short Line at any time during the next tow years will be Inuroiuied instead of diminisbedt — A. My impression is now that the two com- jianiescan act together; that there will bo a very great development of that conutrj'. Uustness will liow into it and How through it m larger volume than ever before. Then, a part of the agreement is that there ia to lie active construction to complete our itystem. Emigration is pouring into that region very rapidly, and I look to »ee new liues of iuiHinosa develop under a joint management, a common management, and I confidently look forward to very beneficial results both to the public (it breaks down artiticial barriers) and to the local eommunitie« of Oregon and Idaho, as well as to the companies themselves. (j. I[i the eveut of disappointment in any of these auticipatioDS could the disappointment go beyond the fact that the Oregon Short Line would bo compelled to foreclose its mortgage, so as to get rid of the lease T — A. The Union Pacific comes into it as a tUird party. The Union I'aciflc cA>mes in with ii form of gaarautee much like the Oregon Short Line, and I should say tliat the lease was tolerably safe. Q. Then the foreclosure of the Oregon Short Line mortgage never c^nld take place so long as tke Union Pacific pays the interest^ — A. So long as the Union Pacific stands in the way, no. Q. If the result of the lease should impair the earnings of tbe Oregon Short Line T — A. It would be the nsual case of a collapse. P08SIBLB BB8ULT8 TO THE UNION PAOIFIC. Q. And the burdenon the Union Pacific wonld thereby be increased (— A. It would be increased; yes. Q. But that is not at alilikely,acconUng to your view of the elements of this contract t — A. I don't think it likely. Q. Then, iu regard to the stock of the Oregon Short Line, huw muob did you say remained in tlie treasury of Uie Union Pacific T — A. I should bave to look at the bookR ; it is a m^orily of the whole Htock. IQ. If this Oregon Na%-igation contraotshould be profitable, that would benefit the stock held by the Union Pacific 1 — A. Very largely. i Q. The stock so held is 98,000,000 1— A. It is so stated in our return. J Mr. LANS. J'age 50. M CHASLES FRANCfIS ADAltS. 101 SALUTA and SOUTHWE8TBBN RAILROAD. - • * • Q. I find a branch called the Salina and Southwestern Bailroad Goih- pany. Will yon tell ns about that f — A. That is another of those agri- CQltural roads in Kansas. It branches off from SallDa^ on the Kansas Padflo, and runs to the town of McPherson, about 25 miles. It is like the other roads that I spoke of in Kansas ; it is an agricultural feeder. Q. How many miles is it from Kansas City f — A. One hundred and eighty-five miles. That makes the line practically 220 miles long. It is stated in the report for 1884. Q. What has been the result of the operation of that road f — A. It has always paid its operating expenses and more, but I should have to look to ascertain whether it had paid the full interest on its securities, all of which we own. There are none of them in the hands of the public. Q. When was this road built f — A. It was before my time. Mr. Holmes. 1878 or 1879. The Witness. It runs through a remarkably beautiful country, rich aod fertile. A few years ago it was the greatest wheat-growing county in Kansas: the champion county. Q. You know nothing yourself personally of the circumstances at- tending the construction of the road f — A. Nothing whatever. Q. And the acquisition of its securities f — A. It was entirely before my time. It was before the consolidation, even, that it was done. Mr. Holmes can tell you all about it. Q. Who holds the secnrities f — A. They are held by our trustee or tke tmstees of the Kansas Pacific consolidated mortgage. There are none of them in the hands of the public. The branch belongs to the Kansas Pacific, in other words. Q. What is your judgment as to the advisability of retaining the operation of this branch in connection with the Union Paciflc t — A. There is no question of it whatever. I should as soon think of the Missoori Pacific or the Atchison, Topeka and Santa F6 or the 0., B. and Q. parting with their branches. They guard them jealously. Q. You would as soon think of cutting off one of your own fingers 1 — A. I would just as soon think of cutting off one of my own fingers with . the idea of strengthening my body. Q. The next line I find is the Salina, Lincoln and Western Railway Oompany. Please tell us about that. — ^A. That I explained yesterday. That rans from Salina in a northwesterly direction. SALT LAKE AND WESTERN RAILWAY. Q. I should have said the Salt Lake and Western. — A. That is a part of the road I was speaking of yesterday, the Utah and Nevada. It is merely an extension of that. Mr. Lane. From Lehi Junction to Silver City. It is a separate organization. The Witness. I forget about that. Is that the road to 'Frisco I Q. It goes from Ironton to Silver Qity, 57 miles. — A. It is a part of a larger ro^ ; it is a road that runs down from Lehi Junction. It is a [Mrt of the Utah Oentral system ] it is a road that branches off from Uhi Janction, on the Utah Central, to the mines at Tintec, down in Central Utah. It is a mineral road, and it comes under <^ Bishop" Sharp's management, which explains why I know so little about it. Q. What is the character of its operations t — A. There is some graz- iBg ooantiy there^ hut it is mainly a mineral region. li\exet ^«g&>i!tot^ Aatiace, 102 •. .•iir.-i.'jefccrflc RxawAY commission. , ■ij.VTfliabliaa boeu its Qiutncial liistorjl — A. I should have to look it 'ml.' *ft is aroHd I know little about, Q. The ioconio account appears to lie debited about $50,000, ducH it not T — A. !t haa more than paid its operating expon«es every year, bat thpro haa been Bome deficit. Ynii had better ask Sidney Dillon, and "Hishop" Sharp about that road. Tlioy conid tell you mtieh rlearly than 1. TllH SOLOMON KAILROAI). Q. We next find the Solomon Railroad Compiuiy. — A. Tbut is a road in Kansas. I say the aiiiue of that as I have snid of all tiie other Kan- sas roads. It riiua along the Solomon Uiver, in a verj' rich country. It is an agricultural road. Q. How far f^'oni Kansas City is it f — A. Two hundred and twenty two miles. Q. Has its operation paid the interest on Its bonds T — A. It haa paid its operating expensei^. I should have to ask about the interest on its bonds. All the bonds belong to us. Q. The ineouie account appears to he debited some ♦•^0,870 T — A. It paid Ita interest year before laat, but whether it did last year or not I cannot say. You will have the fuct^ before jou In the tables. All the bonds belong to the Kansas I'aeilleroad. It ittn branch of the Kaiisai I'acifle. Q. What have you to say as to the nae of that rond as a feeder of the Union I'aeiflcT — A. I say the same that I did in regard to the Halina and Southwesteni and the others. Q. Then^ is no doultt about its being desirable f — A. 1 think not the slightest. I think the Kansas I'aeific would be in a very bad way If it did not have (hose branr.lies. UTAH AND NOItTURllN KAILWAY. Q. The next branch is the Utiih and Northern Kailway OonipatiT Please expliiiu about that. — A. That is a larger atl'air. The Utabana Northern Kailroad Company is a road whieti runs fromOgden, the went' era terminus of tljo Union Pacific, up through the Territories of IJtahi and Idaho and Montana to (iarrisun, where it makes aconiiection with; the Northern Pacific. There are about 450 niiles of it. It ends at Sil- ver Bow now. There are, in exact numbers, 406 miles. It ia a road, which was originally constructed by the Mormons. Q. It is west of the commencement of the Oregon Short Line, then 1 .—A. Uh, no; it eroaaes the Oregon Short Line at Poentelln, about 100 niilea west of Granger. Q. I say west. — A. Vou are right. It crosses the Oregon Short Liufl at Pocate'llo, right at that green spot that you see on the map, Q. Here [indicating ou the largo map] J — A. Yes. That green spot is the Indian re.servation. It crosses the Utah and Northern about tbs middle of the Shoshone Reservation. Q. And makes connecliou with the Northern Pacific at what point t— A. At Silver Itow to Garrison. Silver Bow is the point where itut ]ireseut Utah and Northern strikea the Montana Union, and then itgooK over the Montana Union to (iarrisou, about 50 miles further north. Q. When was that road eonstrueted I — A. That road was cunstTDctM] by llw Mormotm; Itrigham Young was the cughieerofil — long lieforq my till w. II nins baek into aneient \iiRUiT>-. CHARLES FRAKCIS ADAM8. 103 Q. When did the Union Pacific obtain itsintereatf — A. Long before I knew anything of the Union Pacific ; in 1875. It bought the stock of the company. Then it extended the road. At first the road, I think, only went to Pocatello. That road has been very profitable in the past. ITS HISTORY. Q. What has been the financial history of the operation of that road f — ^A. It has been very profitable indeed. It has paid dividends on its stock as well as the interest on its bonds in years past. Q. How was it in 1883 1— A. In 1883 the Northern Pacific had been bailt through, which cut the Utah and Northern business right in two, taking from us half of the business of Butte and the great camps at the north. The Utah and Northern suffered greatly from that cause and from various other causes, such as the price of copper. In 1883 or 1884 it began to improve. Mr. Lane. 1885. The Witness. 1885, 1 am told. Q. These remarks apply to 1885 1— A. 1886. Q. What is its present business; how is the business running at present t — ^A. This year the road will pay its oi>erating expenses and all its interest, and in all probability have a surplus over, judging by the way it starts out. Q. What is the junction point with the Union Pacific? — A. Ogden. CHARACTER OP COUNTRY TRAVERSED. Q. Please describe the country between Ogden and the junction point with the Northern Pacific. — A. From Ogden the Utah and Northern rous Dorth through a very beautiful agricultural and grazing country filled with Mormon settlements, although here it is a very badly located line. It was located by the Mormons, and they located it, as I have been told, on religions principles; that is, they did not want it to go through the towns, so they put it up on the hillsides when they might perfectly well have put it down in the valley ; that holds good until you get north of Logan ; then the road begins to run in a more hilly coun> try until it gets to the top of the water-shed, when it ])a8ses into the lava country of the Shoshone Ileservation and goes along the Pont Nenf until it strikes the Snake at Eagle Bock, north of Pocatello. That is all a lava region. They are, however, now bringing in some large irrigating schemes, and that country, there is every reason to soppose, has a good future before it. From there the road follows up by tbe gate of the Yellowstone Park, with a mining region on its west, from which it derives a very considerable business, until it passes the divide of the Rockies and comes down on the headwaters of the Mis- souri in a very beautiful region, agricultural and grazing — a beautiful region. It terminates practically at Batte, which is now the largest and the most active mining camp in the world. The road does an im- mense business there. Q. What is the principal character of the business which passes over the road f — A. We carry coal, coke, and salt to Butte, to the mining camps, and everything that they eat, drink, and wear. We bring away the results of the mining camps— smelted ores and matte and whatever comes out of the mining camp. Matte is the product of copper ore. Q. Substantially all that business, going both ways, pa&a^ov^T \h!b entire length of the Uuion Pam Uie beginning and is now a part of every contract. The Union Pacific, then, does exactly the same thing to its branches which its connections do to itb When it comes to a branch it allows it a constructive mileage ; one and a half or two to one, or whatever it may be. Attention was called to this matter years ago ; I think in 1882. APPROVED BY GOVERNMENT DIRECTORS. Bnmors were afloat that we were bleeding the main line for the bene- fit of the branches, and the Government directors took the matter up. They looked into the matter. They were not a board particularly friendly to the Union Pacific. Mr. George G. Haven, who was mainly interested in the Chicago, Burlington and Qnincy road, was the chair- man of that board and wrote its report. They went into it very fully; tliey stated all the facts and approved of the arrangement, declaring that the divisions made were fair and just, such as prevailed among other roads ; they have remained the same from that day to this. Q. Have you their report t — A. Certainly ; it is in their regular an- Bual report. I can call your attention to it in a moment. Q. Is it in the Government report of that year t — ^A. It is in the Gov- ernment directors' report of that year. I can give it to you j we have it. Q. While conceding the propriety of that division, as between a parent road and branches who all work in the same interest, would it DOtbe a dangerons method if the parties who had the control of fixing Ae rates, as owners of stocks or bonds of a branch road, had an adverse iDterest to the parent road f — A. Undoubtedly it would; it would admit of abase. Those things always admit of abuse; there are few things that do not, so far as my observation goes. But I have looked into that subject pretty carefully, and I think the Union Pacific has tried to do to its connections exactly what was done to it by its connections. EFFECT ON GOVERNMENT'S 25 PER CENT. Q. Please State the exact effect of this, without reference to the just- ice of the thing at all ; the exact effect of it in relation to the net earn- ings which would remain as applicable to the Goverrment's 25 -per cent— A. The Government makes very largely by the application of wjiat is called the constructive mileage rule; that is, through what is allowed to us by our Eastern connections under the rule. If a rule is to be applied it should, of course, be applied universally. If the Gov- ernment only allows it to be applied where it works in its favur and then lefuses to have it applied where it works against it, the Govern- ment naturally would make. It would be so with a man also. But the Government still makes, unquestionably — I have no doubt of that — by the constructive-mileage rule universally applied ; that is, the main line ma&es more under the rule at Omaha than it loses under it farther West Q. Taking the allowances to the Uuiou Pacific as an advantage to ihi* Govttmnent, and the allowances A. (Interposing.) By the Union Pacific to its branch lines f Q. (Continaed.) And the allowances to the branch Mwt mm m iliimA' vantage to the Government A, (iBterraptiDg.) The Qovernment makes. L lOf! u. s. PAcrnc railway commission. Q. (Continued.) The balance is in favor the Goreriiment f — A. Ua- ilonbtecliy. Q. Can yon furnisb us with tables allowing that result f — A. The mat* ler is one vhich I have bei^n looking into for my own informatioti for a long time ; it bos given mo much trouble. I nm now having accounts le tbo gainer. But, I take it, when the Government directors approve of it Ihe Government will not upset the rule. We bavo the Govern^ ment directors ilat on record on that point after careful examination. Q. It is not the custom to go behind the returns, I believe T — A. Th»2 have done it in one or two cases. Q. The table then that you will give us will show the benetlts to thi branch roads t — A. Yes, undoubtedly; when it is printed. Q. And the income to the Union I'acilict — A. Yes; there lias b«en so much unintelligent talk on this subject that 1 was anxious to iibov what the working of the rule was throughout. FBEIQIIT AGENTS. By Commissioner Anderson: Q. How many freight siti>erintendenls are there between Omaha and Ogden who have control of the rates of freight between thoue jtointM, and oti the iuterveniug liucsT — A. Thera is only one. Q. Who is tbati — A. Our general freight agent, Mr. Monroe, Omaha. Q. Does he determine all questions relating to freight rates T- The Union Pacitie, like all large roads, is divided into live department^ one of which is known as the commercial department. The commerdw department is under the charge of General TrafHc Manager, Mr. T. h, Kimball. Mr. Kimball has under him a general freight agent and gen- eral passenger agent. So the thing is subdivided. There is also att intaiBtaiit g'cneml tnifiic niunapev. The rates for the western iKirtlOQ ofllie line !nv made by M''. P. V. H\io\\i>',ftVV3!jfe\\,v\wC\,'V\v.Waws»fe' CHABLES FBANCIS ADAMS. 107 the general freight agent at Omaha. They are in constant telegraphic commanication. CONCEENINO SPECIAL BATES. Q. What freight agents of your road have authority to make special contracts for freight with individual merchants in different localities f — A. Since the 5th of April no one has ; we have no special contracts. Q. Since the passage of the interstate law t — A, Since the interstate- commerce law took effect. Q. Prior to that timet — A. Prior to that time it was all done in Omaha. Wherever a special rate was made they telegraphed to and fro and obtained authority to make it. The traffic has to be concen- trated at one point. Q. Were those special rates reported to you f — ^A. No, they cannot be : I have to depend in this matter upon the general traffic manager. Q. Did you make it a part of your business to look into them when visiting Omaha t — A. No j I talked about them with the general traffic manager. As respects the more important, where they involved some- times two or three million dollars of business a year, as in the case of the Anaconda Mine or the Grant Smelter, the general manager would come to me at last and say, " What shall we doT' After talking with him I would decide the question of general policy ; but when it eame to details, the general in charge of an army might just as well himself try to overlook the details of his quartermaster's department. OONCERNINa DISCRIMINATIONS IN BATES. Q. To bring the subject up in a different way, I will ask it in this shape: Have many complaints been made to you from merchants or persons engaged in business along these different branch lines, or on points on the main line, of discriminations ma- en.\\ \\. \\\« a.wW'M^^Awn «^ ». ■> CHA&LES FRANCIS ADAMS. 109 which 18 uuiversal. For instance. I \^ill give yon a case in point. You Uike the Chicago, Burlington and Quincy Bailroad, which is our com- petitor in the South. They are not trammeled as we are by charters, &c.| yet they apply to their branch lines exactly the same rules we do. So far as I know the rule is of universal application. With the Korth- em Pacific ii. is the same. So also with the Northwestern. I do not know a railroad company in the country that does not apply it; if the rale 18 wrong in our case it must be because we are for some inscrutable reason entirely exceptional. Q. In this ten million of stock issued iu 1881, was the consent of Con- gress obtained t — A. I think Judge Dillon can tell you more about it than I can. !&Iy impression is that the stock you refer to was issued under our charter— our original charter. Mr. John F. Dillon. The opinion of Mr. Bartlett and myself is in writing as to the authority to issue that stock. Commissioner Akdebson. Yon will let us have that opinion f The Witness. It was long before my day ; I know nothing about it. Mr. John F. Dillon. I will. It is in writing. That will tell the whole story. GUARANTEES MADE WITHOUT CONSENT OF OONOBESS. Q. Ton guaranteed the Saint Joseph and Qrand Island bonds of seven millions, I think f— A. Yes. Q. Was the consent of Congress obtained ! — A. No ; we did it under the advice of counsel. It did not come within the section of the act of Congress which you have referred to. Q. Was there an opinion delivered by counsel t — A. Yes. Q. You will let us have that I— A. Certainly. Q. Also with reference to the collateral trust bonds of 1879 ? — A. Thwe also were issued* under advice of counsel. We have elaborate opiDiODs; everj'thing of that sort has been fortified so far as we could forUfy it; that matter also has been before the courts. Q. (By Commissioner Anderson.) What, the guarantee I— A. The collateral trust pools. Q. Of what large pools, outside of the operation of its own system, is the Union Pacific a member f — A. Before the fifth of April we had xk)o1s evwywhere. Since that we are in no pools. Wherever we met a com- petitor we had some kind of a pool arrangement, except in Kansas, where it was forbidden by law. Q* Which are the more important pools of which you were a member prior to the 6th of April f— A. There is the Utah pool, the Colorado pod, the Nebraska pool, the Omaha pool, the Transcontinental pool, the Montana pool, the Oregon pool. It was the regular way of doing bosiness wherever we met other lines. TEANSCONTINENTAL POOL. Q. Now in regard to the Transcontinental pool, who were theother mem- ben of that pool t — A. The original Transcontinental pool consisted — loQght to say that was long before my time; Judge Dillon can tell JOQ better than I can— but it consisted simply of the Pacific Mail Steam- diipOompaDy and the Pacific railroads— the Union Paci&c an^^uXs^ 110 U. 8. PACIFIC RAILWAY COMMISSION. Q. When you became presideut of tlie road what was tliu iiieiiiber* blii]) of that pool 1 — A. WIicD 1 became prosideiit of llie road tboNortU- cm Paciflo bail gone tbrougli. Q, Aiid it bm] be«oiuo a member 1 — A. Itliad b(;comea member; Ui« i)titivcr and Ititi Cirande and tbo 01iicni;ii, BurbnKtoD and Quiiiuy had guno through to Halt Lake id coiiuectiou with tbo Central Pacitiu, if I n^membcr right, and wo had the Southern Pacilic, and the Atlantic and I'uciflc, and the AMiison, Topeka and Santo F6. There wero livu or uix mcmberH of it. Q. llow weie the operations of that pool cotitlucted with ref'c^reiice to deteiininiriK the porceiitaKO of each member I — A. That was manageil as all pools were managed, by agreement and arbitration, Q. Who were the perBons ihat met together lor that puri>ose} their names, please! — A. Mr. Clark, on behalf of the Union Pacifio; Mr. Town. I take it that sometimes the preshlents would meet here — Mr. IJnntingtou, Mr. Uouhl, Mr. Dillon, and the president of the Pacific Mail. Theu again the general traffic managers would meet. I noTer met the pool but once. The presidents then met in order to make a la«t effort (a year ago February) to prevent the thing from breaking up. We failed in our efforts, and it did break up. There is a certain eU- qnette in railroads, and when tlie presidents meet they always meet tba presidents, and when tbo general managers meet they meet tlie Kenenl managers, and when the general traffic managers meet it ia the geQ««t, traffic managers. METHODS OF DIVISION IN POOLS. (J. On what basis is the percentage arrived at ; has it any relation to the actual bnsiuess done by each member T — A. Yes ; for several years five years — I was arbitrator of the trunk-line system here in New York, including all the railroads from the Ohio to the Lakes, and the same rule prevailed there. It is universal. It is dictated by common seuee. That is, you take the tstatistics of the business, and the direction of tbo lines, and all the data that can be snpplied to you, and yon then sit dowu Aud ascertain as nearly as possible how the business would How if left to itself regularly at equal rates and equal aecum modal ions, and if you can you agree on tlie percentages; if you cannot, you refer tbcni to arbitration. The basis is always how the business would naturally How if lellto itself. Q. Was tlmt the rule which prevailed in the Transcontinental iwoll— ' A| It was. Q. Do you know what facts or flgnres the members of the pool bad before Ihem to determine the natural flow of business t — A. They hadi the general data of the business which had been going on ; and when- ever they failed to agree, theu they all cut the rates and the busiuew went at a cut rate. We were guided to a certain extent by that. ' Q. I am simply addressing yon with regard to thoelemeuts that were placed before the different members of the pool as proving what eaoU member would have been entitled to if left to the natural ordexof thiogs. What particular evidence was placed before you as to the freight acta- ally carried, or which would be actually carried, by the Pacifio Mftit Steamship Company ! — A. We knew that at an equal rate the Pacific Steamship Company would carry nothing at all. Owing to (he trans- shipment and the greater length of passage, &c., it could only carry by reducing the rate. At equal rates it would not carry any freight any mart) than it would carry paaacngtrs-, butlUen it could reduce the rata^ carrjiiiff iu baUiiat, &c., until it wo«\d mokii V^na W^wVii^a 'KQ\:\J:i»is,' as, and yet makt- sometUiug itBe\t". CHABLES FBANCIS ADAMS. Ill Q. How closely did you examine this subject yourself? — ^A. This sub- ject bad passed out of its earlier stages long before I had anything to do with the company. rAOIPIO MAIL SUBSIDY. Q. When you became president of the company what did you find that your company was paying to the Pacific Mail Steamship Com- . paoyf — A. I think our company was paying its proportion. Q. No; what did you find the pool was paying to the Pacific Mail t — A. I think it was about $80,000 a mouth. But when I say that the eompanies paid that, you must understand that there was a regular oootract-, which had been before Congress, before committees, &c., and which was perfectly well known, under which, in order to prevent the demoralization of the rates, the payment was in form that the companies agreed to take the whole freighting capacity of these steamers, which was to be estimated at so much — say, $85,000 a month, or whatever it might be, and then they sent whatever they saw fit by the steamers; they QB^ to send the heavier and coarser freights, which were not desirable to carry by rail. In that manner the balance that was paid was in the nature of a subsidy over and above the freight money earned on what was actually sent. Q. It is not true that you have officially stated that this through busi- ness, as far as the Union Pacific is concerned, is a decreasing quantity, and becoming of less importance every year? — A. CTudoubtedly. Q. The interest of the Union Pacific, as connected with this pool — as influenced by this pool — solely relates to through business t — A. Yes ; nndonbtedly. COMPABISON OF BAIL AND WATER TEANSPOBTATION. Q. What is the time of transit from Eastern points, say New York to San Francisco, by the Pacific Mail t — A. It is a month; thirty days. Q. Is it over twenty-five days t — A. I believe so ; I never went by that route. Q. What is the time by the railroad t — A. For freight or passengers 1 Q. Freight. — A. I think freight is about a fortnight or three weeks, except the fast freight. Q. Do you regard the Pacific Mail as being a possible competitor for any of those kinds of freight as to which time is important? — ^A. It depends upon how important time is. People will delay a good deal for the sake of getting a lower rate ; and on all these subjects yofi have me rather out of my sphere. The general traffic manager can en- lighten you as respects them much more than I. Q. Under the arrangement made, what proportion of the $80,000 a month was paid or chargeable to the Union Pacific t — A. About a quar- ter to a third. That has all been reported to the Bailroad Commis- sioner and is in print. We should be very happy to give you a copy. Q. I desire to ask whether the payment of as large a sum as $30,000 a mouth from your company to the Pacific Mail would not naturally cause yon to make a close examination as to the reason which justified such a payment t— A. It was a perpetual subject of examination and discussion while it lasted. EFFECT OP DISEUPTION OF POOL. Q. Have yon ever reached aay conclusion yourself, foimd^ on ^o\a Jt^gmmt in tbia matter, aa to whether it was an advantiekg^ \xi Xku^ 112 V. S. PACIFIC RAILWAY COMMIBSION. Uuiou I'uuillc ami to tlie Guvoruinoiit to piiy tliU Hiibmdy or uott — A, I have reached a most decided opinion since tbe thing wont to pieocti. There ia no qnestion that it was an a^lvantage in a money point of view; lui immenHo one. The results since have proved that. Q, Please describe the results that you refer to. — A, It is in the re- port of 1886, on page 21. This pool went to pieces ia the begiuiitu? of the year 1880. As compared with the previous year, we earned mxty million more tons oue mile, and we earned for so doing $463,000 lew than we bad carued the year before. It was an appalling Btat«mont III other words, we carried 35 per oent. heavier tonnage for 20 per cent. less money. It was an appalling demoustratiou of resnlts. Q. In comparing these two statementa together iu the yeiir boforfr the disruption of the pool, is tbe subsidy deducted as part of the oper- ating exiMsnsesf — A. Ytis; it was every year. Q. In the comparison yon put thoaetwostatemeuts together t — A. It< was dttducted from the earnings in both years. Q. In the year before the disruption 1 — A. Yes. (J. Ko a» to compare tbe actual net earnings of that year with tb« actual net earnings of the transcontineutal business iu the following year! — A. Yes. DEOEEASE IN KATES AJTEg DISBUPTION OI-- POOL. By the ChajbMAK : Q. The decrease of rate was general througtiout tbe country, was ft iiott — A. Nothing like what I have Just stated. Q. Not in the same proportion, but there was a decrease 1 — A. Tbero ia alwii}« a steady decrease; there has been year after year. On pagft 20 of the report you will And every month of the year how tho thing* affected us, and tho rati.>. Commissioner AnDRRBON. The commission have not had an opportO^ nitjj" to examine this report yet. Tlie Witness. In Jaunary we got 1^ cents a ton a mile on the traus^ uoiitiucntal (Veigbt— 1.26 cents, in April we got 0.41 of a cent. Just ouc-thini as miicb. Tliat is, two-thirds of the rate had disaiipuared is tbe straggle, And for tbe yeiir we averaged thrco-fonrtbs of a oent a ton per mile, as against 1.22 cents the year before. That was tbe ro< snlt of the struggle. Q, Were there not a great many irregularities in tbe rate for the difr fcrent months of the year t — A. At times there was no rate whateveri' it' woA a simple struggle to do business for nothing; they paid foroa^ rying goods. Commissioner Andebson. We find it stated that iu January, 186t^ tbe rale was only 0.77, Tlie Witness. I don't know what that is due to. Yery likely it WM due to ii pool settlement made during that month. H. SpcciiLl eouipetitiou T — A. No, it could not hare been any Bpeoid com[icLition; it must have been something or other, you cannot tdt what) that took place that montb. It was abnormal. Q. Tbe average for 18»6 is 0,74 and for 1886 1.221— A. That is it ea aetly. You will find there the analysis of the whole result of breakini up that pool. I'0(J1. BB'JTLKMKSTS. By the (JUAiUMAN; Q. Wi/i j-oii ])lL'«8e oxplaiu whore, iu ^o\iiv*»^' »s*»'''i*.'»^'^'»V'»S----- a au hicotuQ, you carry it in yoat accouuVa^ \a\.VTO>i).sni^T4>isvit' OHARLES FBANCIS ADAMS. 113 pensesf Where is the dedaction made. For instance, if it is from gross receipts, where do you deduct for the amount paid out in any pool ar- rangemeutf — A. That is made in what we calleil the pool settlement-s. It goes into the gross earnings. Q. From which you deduct the surplus earnings to ascertain the net eaniiugs f — A. Yes, we deduct the operating expenses to ascertain the net earnings. Q* That is in the operating expenses f — A. It is in the earnings; it never goes into the operating expenses at all. That is, the gross earn- ings are so much less. For instance, when the earnings are about to be reported for a month and there is a pool settlement of $20,000 against ns, and the earnings are $100,000, there is reported $80,000. We earn 80 much less. We pay our pool settlement before reporting gross earn- ings. Q. They do not enter into the gross earnings f — A. They do not enter into the gross earnings. AFTERNOON SESSION. GHABLES FBANGIS ADAMS, being further examined, testified as follows : By the Chairman : Question. There is only a general question that I wish to ask. Qow do yoa make up your total gross receipts from all sources 1 — Answer. That is income, apart from earnings! INCOME ACCOUNT. Q. Yes. — A. It is made tip in the regular way. Whatever comes in which belongs to the income, general income, is added to the gross eamiDgs. Q. How many income accounts have you ! — ^A. That you will have to ask Mr. Mink. There is only one income account, but that is derived from various sources. B.v Commissioner Anderson : Q. It has a great many branches t — A. It has a great many branches. By the Chairman : Q. Do you carry the coal profits into the general income account 1 — A Yes. Q. And also the stone company's account ? — A. Yes. Q. Then they are all carried into one gross sum, from which the op- eratiDg expenses are deducted and from which result the 5 per cent, calcolation !— A. It is not quite that. Q. What is it! — A. A railroad company has two distinct revenues; one ftom earnings and the other general income derived from miscella- neous sources. The net earnings of the company are wholly distinct from the general income of the company ; the net earnings of the com- pany are derived from deducting operating expenses from gross earn- ings, not from gross income. You have those two things, earnings and income, net earnings and net income. THE government's PERCENTAGE OF NET EARNINGS. Q- Then when you ascertain the amount due the Goveiiime{ii\» ^ou^ DO^ dedact from the gross receipts the operating expeiiBe&)\>ut^ou\i»r SPB I'. H. PACIFIC RAILWAY COMMISSION. jilreHily mudo u ili-diii^lioii rroin wliiuli yon ilotliict tlio mHtmtiiit; ^ixtwn- m>hT — A. Tlw iDiyniuiit to llio (lovcnitiitiiit it* cstablisuod on it wbollj ilill'uroiit buHJH ; it is I'stulillHlied by law. It w fw tuuub, 5 or 25 |i ^iit., ol'tliu uia uimiiiigs of tbo roiul — not tlio net inoomu of the com* |>aiiy. Mr. John V. DtixoN. Net enruiiigH or tbu roodl Tbu WiTNKRS, Net curiiiugH of tbu ruiul, not tbu iivt inuomu of tbo uoiiipauy. (J. Wb»t do you do witb the iixMniu reu^iiv&d from tbu huIo uf lanill In lliitt Mirric'U bitu tbo gross rt'ci-iptM ! — A. No ; tbnt coiintittiU'H, us I ■•xgibiincMl ycMttinliiy, u wholly ai^iuir^tto in'c^iiinl, nod io bi>tli roiidn it is paid ovtir to tniHti'fH ; it ui-vcr coIIll^'4 into tlii^ IihikIh of tli« <;i>iii|miiy ; Ibu compaDy never tonidu'M ii ibilliir of i( ; it in foiwjiribd hy tb«« lanu iijjoiit, iimlor tbd tciiiiH of tlio nioil;;ii[;('s, lo lln- IihhU'cs dironMy; it doca iiftt enter on onr Iwuktt and cutx no Ugine tben? ; we cb> not biuidl^ it In any way. Q. Will yoii exjibiin, tben, wby tlut income lutcoiint from tbo latiil siu fmm Hie enni coriipaiiy, tlic invc«tm('iit«of tbe Union I'ariiie (Jompatiyt' are not;! [i;ir!. (it'il[<>^'MPWsri'reJ|iiHlViirn wliii-li ilii'liovi'i nriu-iil. »lirniblKet i1«I.fn-<-Iil;i;;f.irili'.liicli.,t. !-^.\. I!,T;mM'lli;Li ispifM-i ili.'ii liy l;nv ; tUvn in a 1;l\v •h'llniti;: » l.^il ix't I'^u'tiih^s aii', mxl v liuw hoitiiir;; wliatcvvr loilo with il; It. JH all 1<^ III WaHliiii;;ton, and Ikik been pa^wd upon by the i-uai'lK; w« havo notbin^ to nay alioiit it. Tlii> (]ii AIRMAN. These qaemiunxHroHiibniilte-d loii«iii tbe bill. Tbat in why we iwk. The WiTNKsa. I imderstftiid. .IITOICIAL DKCISI0N8 AS Til NKT IIAU.MNCS. Mr. John V. Dilion. If yon will allow ine Io Ntak-, lliero liuvu iHifuru tbo Hiiptenie ('omt ul" tlir I'nited yialen l^s■ as a boy in Saint Louis, and I hare traveled more or leas in llie Western country, particularly along the lines of the Kun3fl« PaclBo. Q. Were vou the owner of any securities of the Kansas Padtlc prior lo I«7(it— A. Yes, sir. (j. Bo that you had a personal interest in acquainting yourself with the facts relating to itsconatrnctionit — A. Yea, sir. COSSTEUCTION OF TUB K4M8AS PACIFIC. Q. Please give us, in a general way, not calling uiHin yon now for at^tual personal knowledge solely, such information as you can in ragant to the origin of this Kansas PaciHc construction by ittt earlier names^ A. In the fall of 1870 I became one of the cnmmitlee of Iwndhoklent thti Denver Extension mortgage of the Kansas Pacitlc Company. Tliei meeting uf the bondholders was catliMl by one of the niceiverH of tJiav roiul, who had just been appointed, Henry Villard : and 1 shortly nfter became couufiel of the committee and of Mr. Villard, as rocciver of tliat road. The senior couuacl was Charles F. Southmayd, of this city. At' moat immediately X was required to go to Baint Louis, which wiw then the- henilquarters of the Kansas Pacific Compnu.v, and theace to the line of tlie road, and was chargetl with the duty of removing the foreclosure suit from Shawnee County, Kansas., in a local court, to the cireuib <'oni't of the United States forthcdislrict of Kansaa. From that t'ime< liirwiinl niitil the decree of foreclosure was entered and Ihe road reor^ giiiiii^t'il, 1 wivs more or less continually present along the line of tlitt mud, attending the circuit court of that circuit wherever it might bei Kitting, for the purpose of obtaining orders and defending ootiona in relation t« that forei^losure suit. (j. liufore prooeeding to that will yon refer us to the records tual givtf' as such information as you have to enable us to understand tho origia of the structure which exists from Kansas City to Denver, and a rel'er- cnce to the various mortgages that were from time to time i»ut uimui the pnqierty t LKAVBN worth", PAWNEE AMD WESTERN BAILEOAD. A. My professional business required me almost immediately to familiariee myself with the history of that railroiHl. Ilegitining at (be lime of the charter, and commencing at the beginning, the Leaveu- wortli, Pawnee and West*'rn Railroad Company wnn organized by tlie Icffislatiirti of Kansiu in the ye4ir 1X.''m. Itnt Ultlu whs done for sotnr tiiiw hi (lie w.'*y of actual rai\v"in\\nu\<\\«?.. \\\v\v>-'.\\\v\V \\\.\,W ABTEMAS n. HOLMES. 119 done until the final passage of the act of 1864, amending tbe act of 1862, known as the Pacific Bailroad acts. Q. Tbe act of Congress t — ^A. Tbe acts of Congress. Those acts, taken together, famished the means with which to eqaipand bnild and operate these Pacific Bailroads. By those acts yon will find that Con- gress took op such railroads in the States as approached to the main line of the liystem, fuid the Leavenworth, Pawnee and Western Bailroad, a Kansas corporation, was taken up and endowed by the Pacific Riiilroad acts with the rights, duties, privileges, and grants of land and money set forth in those acts. Immediately after the 1864 act was passed this road became a rival of the Union Pacific, Iowa division, to reach the one hundreth meridian first, because that one of the Eastern roads — and there were several— which reached the one hundreth meridian first bad the right to proceed and build westwardly to a connection with tbe Central Pacific when they should come along eastwardly. But beginning in 1865, and, indeed, for a year or two prior, the Leav- enworth, Pawnee and Western Bailroad Company had become divided among itself, and there were two boards of directors, two presidents, and two sets of officers, quarreling for the possession and management, and the contest was carried to Washington. On one side were Generals Thomas Ewing and John C. Fremont as the claimants of the corporate franchise, ownership, and board of di-. rectors; and upon the other was Mr. Samuel Hallett and John D. Perry. Mr. Perry was a Saint Louis gentleman, and associated with most of the persons who were, as they said, the de jure board of direct- org. They went to work and had built some railroad from Kansas City to near Lawrence, in 1865. Q. Lawrence being about how far from Kansas City t — A. I think it IB not more than 30 or 40 miles ; I do not risk my memory on that. Prior to August, 1865, there had been a construction mortgage made, and the bonds were outstanding. But the Perry party obtained the recognition of the Government, and then made contracts for the build- ing of the railroad. TUB LBAVENWOBTH, PAWNEE AND WESTERN MOBTGAGE. Tlie first mortgage of the Leavenworth, Pawnee and Western Kail- road Company, which had at that time changed its name to the Union Pacific Railway Company, Eastern Division, was from Kansas City to the one hundred and fortieth mile-post west of Kansas City. Its date was August 1, 1885, and they were the bonds and mortgages author- iied by the acts of Congress, namely, at $10,000 a mile, tlie aggregate of the principal being $2,240,000. That contract was made with the thenUDion Pacific Bailway Company, Eastern Division, on one hand, and with a party of gentlemen who were known as E. M. Shoemaker &Co. Q, Will you please find that mortgage in the book which I hand yoQ. 80 that we can identify it for reference t That book is a collection of the mortgages. — A. That is the mortgage found at page 58 of a com- pilation described as '^ Indentures of the Union Pacific liailway." Q. Can you furnish us with a copy of that book ! — A. Yes, sir; 1 Bopposed the Commission had it. Q. Will you keep that book and refer to them all by pages as you ooiuetothem f — A. Yes, sir. Q. Yon were ])roceediug with a st'atement of the contracts under the JoortgBget^A. Upon the same date another contract 'waft m«Afe\j«^ m U. 8. PACIFIC RAILWAY COMMISSION. twcen the name parties, tJie first contract being Exhibit 1 of the i>rint#d document I hold in my band and tie mortgage of the same dato whiol^ related to the bnitdtng of the branch road, which was conipuhiory by thfl act of UongreHs, from Leavenworth to Lawrence. That is marked Ks^ hibit 2 in tliu papcra I now refer to. MOETOAOK TO TDEEK HUNDRED AND WINETY-POnttTH MILK-P08T, The next innrtgiige was upon the road projier from Fort Riley to tbriS three hundred and uinety-fourth mile-post, which had been detortniueA to bo tlie [)oint by the Government and road which the one hundredtlc meridian on the line of the Union Pacific would be if brought down tq: the parallel upon which the road was built. Perhaps 1 should explain that by this time the acts of CougrenH hai permitted the Kansas PaciflG road to build in a westerly direction, It tho dirt-clion of Denver, and the road was at this time no longer ro* quired to uuite with the Union Pacific Railroad Company at the OMJ hundredth meridian. That mortgage was in iill respects like tho flrtt mortgage I have mentioned, with the exceptiou that tlie due date^ ot the interest were June and December inste^id of February and AtigusC^ TDE GOVERNMENT MORTGAGE. The itest mortgage, in point of time is the statutory mortgage of tbft Oovenimeut, which is $1(J,00'J per mile, and la junior to tho two mort- gages 1 have inoiitioiied, the two mortgages being merely Kcctionfll' mortgages instead of an entire mortgage. ' Q. Doe.s the first mortgage stop at the one hundred and fortieth mile- post! — A. Yes, sir. Q. The llrst, in point of time 1 — A. Yes sir; it was Fort Biley, which' was a Government reservation, and which at that time was pritetioall5< on the borders of civilization. By the Chairman : Q, What is located at the one hundredth meridian i — A. 1 have for*, gotten. It is simply an imaginary point. There is no town withia: some little distance of it. 1 think it is out there Jiear Hheridan. I cait- not apeak positively. Tliere is no towu or settlement directly tliertf but that is the point at which the Government subsidy in bonds ended. When tlie (iovernment permitted ns to come down t'roin thereto keri they said, " We will not give you any more bonds," Tho balauvo 0 the road is what is known as the Deuver extension. It is from the bundredtl meridian to the city of Denver. By Commissioner Littler : Q. A distance of about how far! — A. Two hundred and forty-foat miles. Ity the Chairman : Q. From Kansas City to this point t— A. No, sir ; tho one huudredH meridian, or the three hundred and ninety-fourth mile post, to Uie citg of Denver is 244 miles. " (J. And from KansasCity I — A. it is 304 miles, niakingaii aggregutfl of 038 miies from Kansas City to Denver, exclusive of 33 miles wbiol should be added, tVont Leavenworth to Lawrence. Q. I'oii bad $18,000 i>er mile on the 3^4 uiileaf— A. Tlireo hundre f ninety-four miles. ABTEMA8 H. HOLMES. 181 THE INCOME MORTGAGE. By Commissioner Anoebson : Q. Will yon please continue your statement of me mcombrances that were put on the road, from time to time, in its constroctionf — A. The next, in point of time, is what is known as the income mortgage. The income mortgage bears date Jnly 1,1860. It was made to cover the income, as defined in the mortgage of the line of road from Kansas City to the one handredtii meridian, and the LeaTcnworth branch, junior to the several mortgages I have mentioned, with very pecoliar provisions as to what the income was, and reserving certain rights to the company. It was practically, in my judgment, a preferred stock, and by the terms of the construction contracts, of which I have si)oken, between the company and B. M. Shoemaker & Co., and Shoemaker, Miller & Co., you will learn the methods by which this income mortgage was executed. Q. Those contracts yon will leave with ust^A. Yes, sir. Q* Please give us a reference to the page of the income mortgage in your compilation. — A. The middle division mortgage, the mortgage from the three hundred and ninety-fourth mile post, will be found at page 71 and following, of the book referred to. The income mortgage at page 76 of the book refeired to. Q. Has that income mortgage been the subject of litigation t — ^A. Very generally, in a great number of suits. Q. Is there one in particular that contains evidence taken with refer- ence to the net earnings applicable to the income claimed by the mort- gage!—A. Yes, sir. MOBGAN vs. UNION PACIFIC AND KANSAS PACIFIC. Q. Will you please give us the title of that case ? — A. Henry Morgan against the Union Pacific Bail way Company and the Kansas Pacific iUilway Company, in the United States circuit court for the southern district of New York. Q. Who was Mr. Henry Morgan's counsel ? — A. Mr. George H. Foster, of Weekes & Foster, of this city. Q. Have you copies of the testimony taken! — A. The original testi- mony is on file in the suit, the suit having been got ready for hearing on tibe pleadings and proofs. The record in that case was printed, but it never was gone over carefully by me for the purpose of verify- ing the figures, of which there are multitudes, and a great many tables, because just about that time the suit had its quietus by the failure of Mr. Morgan and his parting with the bonds to his assignee. By Commissioner Littleb : Q. Was it never tried t — A. It was never ultimately tried. My best jndgment is that the figures on file — ^that is, the testimony taken and filed with the clerk in that circuit court suit — are the best available oompntations that can be made. LEAYENWOBTH BBANOH MOBTOAOE. By Commissioner Andebson: Q. Will you continue now with these mortgages I — A. The next mortgage, in point of time, was the Leavenwortli brauciii moT\,f;ai%<^^ whieb will be foand on page 64 of this book« V. S. PACIFIC RAILWAY COMMISSION. Q. Six hiiiidred thouaatid ilollara iu till I — A. Yen, sir. Somtstliitig hiioiilil he 8ai() Ueivi whicli aiilici))at.e8 n lJtt]f>. Itut in the uugotia- lions lor tlie cxtf'iiwion of tlio roail from tlie one Imndredth meridiau to Denver, tliu I>iiivir ixlniwioii mortgage was drawn; but ita negotia- bility wait liitii>iii-ri-e rego- tiatt^d. For that reason the instrument was drawn between the linn- sas I'aeiflc Company, on one part, which atill remain(Hl the Union Paeiic Kail way, Haatern Division, by proper name — the trustees of the mort' gage — and ccrtiiin [lersone who conaented to having placed upon tlieir income bonds a atamji, which, by its tej-tns, subonlinatedit to the l>cii> ver exteusion mortgage. The instrumentof which J have spoken aod the stamp referred to are, reepeotively, I^xhibita No. 4 and No. S of the paper I have referred to heretofore. They are not originalK, but ttwy were prepared by me. The wituess files Exhibits 1 to 5 inclusive, of which ho has spoken. They are as follows : Exhibit No. AoRKEMKNT itiotlo aiiil tiiDuluilc^d tliiM Gri>t iluy a! July, A. D. cigbtenD fannilml MtA. nixty-fivo, Uolwueu the Uuiuii I'aciilc llnilway Cumpany, EMt«ni Divkion, uf Kno* HUB, of tlio first part, auil Robert M. Bbueinitker, BdwanI Millar, Joa. C. Dutferi Matthow Dnird, Cnrloi 8. QrMluy, Oitea I''. Fillt-y, J&mos Arobi-r ktiil Stephen U., B«lgn)l, of Ibo Bearti(wt of the second ^K liaroby ngroe to (nmiali all t.bo tnntcriitl mid equrpnicnta, iron, nnlU, cbnlnB, ip ^Hh ilMpnnt, timber, nioaonrj', ralliiij^-BlocIc and nlltrrniaU'rlnl notHlnl Ut build, cotH' ^M J Mid eniiip for tlie party of tlie llrst iinrt, u llrst-olitm rallrmid, with tlio ncmlftil tui ^B ' aatji, from tbe town of I.nwrcnne, in Ki ■ «ti - ■ rmii aatii, from tbe town of I.nwrcnne, in Kiirbmi, to Fort Rlloy, *nd t^OKraph ltn», Mil RtBiitlally on thn mntn, which hits brinn mirveyril for wtidMtlroMloooipAiif, rBfiemic bern^ ?ind to their mnpa, plnnn nnd protiliw, nnd \ti eoiintrnnt and build uncli fimt-elM raflmm} aiut loli^rnpti line, aiid nppnrU'nnncnt, in V\tr tnawwi Aenetilwd In on Aet« Ci>iif!ivm paMml.fiilv Iflt, Ihll'J, enlititd " Ait (kiV\oiiu\ vw t\i» WAwVi>it\;w«v lA «. TiS A&TfiMAfi H. HOLMES. 123 road and telegraph line from the Misaonri River to the Pacific Ocean, and to secure ta the Govemmont the use of the same for postal^ military and other purposes/' and the other acts of Congress passed in reference to said railway company, and to supply the depots, water stations, engines and cars, in accordance with the terms of said acts of Congress, complete as a first-class railroad, all to be done within the time in said acts sx>ecifiod. Seeond.—ln consideration of the construction of said road and sidingSf etc., as in the foregoing section mentioned, the party of the first part agree to pay to the parties of the second part, the survivor or survivors of them, the full sum of fifty thousand <$50,000) dollars per mile of main track, measurement as follows : Twenty-five thou- aana (f25,000) dollars in the capital stock of the Union Pacific Railway Company, JSastem Division, for which full paid certificate shall be issued, and in cash twenty- five thousand (|S^,000) doUars, which said sum of fifty thousand (160,000) dollurs ih to be paid pro rata in such certificates of stock and cash on the estimate of an engi- neer to be designated for that purpose by the party of the first part, such estimate to bo made every thirty days as the work progresses, in proportion to the work done and material furnished. Provided that said company may retain fifteen per cent, of aaeh estimate, nntil each successive section of twenty miles is completed acconling to this contract, and full payment shall be made in accordance with the terms in thiH contract specified upon the completion and acceptance by the Government of the United States of each division of twenty miles. TMrd, — It is further agreed by and between the parties hereto, tbat all of the work nnder this contract, and all the materials, shall be performed anil supplied to the full satisfaction of the Board of Directors of the said Union Pacific Railway Company, E. D. : and if the said parties of the second part, the survivor or survivors of thoni, shall fail to perform the work herein contracted to I>e done as fast as said Boanl shall from time to time reasonably require, or shall do any kind of said work imperfectly, or not in accordance with the acts of Congress aforesaid, then the party of the fintt part is authorized to terminate this contract, paying said parties of the second part, the survivor or survivors of them, for tbe work actually done and the materials sup- plied only. And the said party of the first part may, thereupon, do said work, or con- tract with any other party therefor, and no damage shall be claimed by the party of the second part, the survivor or survivors of them. It is further understood and ^{[Teed that in case of a failure on the part of the parties of the second part, oh nicn- tioned in this section, then and thereupon the fifteen per cent, of the amount of tlio monthly estimate previously made shall be held and permanently retained by said parties of the first part as liqidated damages, and the said parties of the second part, the snrvivor or survivors of them, shall make no claim therefor. Ikmrtk—li is further understood that in the event of the death of either or any of tbe parties of the second part, this contract Hhall not thereby bo terminated, but the flurviYing parties shall proceed to the completion of this contract without interfen^nco npon the part of the personal representatives of tbe deceased party. or parties, and in sach case the party of the first part shall not be liable to account to or with the i>cr- aonal representatives of the deceased party, nor until tbe completion of this contract, and seen accounting shall then be had between the party of the first part and the sur- viTors of said deceased, and not with his representatives. _x i n Fi/tk.— It is further agreed and understood that said parties of the second part shall liave the control and use of the road, being liable for all expenses, and entitled tj> all receipts therefrom, until the completion and eciuipment of siiid road to Fort Riley, 4u;cording to the terms of this contract; tbe party of the second part carrying tlie mails, troops and munitions of war, as required by the law. In testimony whereof, the partv of the first part have caused this agreomont to be signed by their President, and the corporate seal fixed, and the partioH ot tiio aecond part have affixed their hands and seals the day and year first above wntu»n. R.M.SlI()KMAKKn, fi.H. In presence of witness : H. P. RUTTKR. fr. P tUStmmr C«Hnp«nr.f1 K.U,SmL J J. p. Dkverbux, Secretary. C.S.Gkkklkv, 1.. H. GiLKS F. FlI.LKY, 1.. M. .lAMRrt Alien KU, 1.. H. 8. M. Kdukll, 1.. H. KdwakdMim.kii, 1.. H. M.Uaihp, 1.. H .InllN h. I'K-MIM. /•n lIlflM^ r ^^^^^BMlnMit mat ^^^^lion Pftcilli V Robert M. SI U. 8. PACIFIC RAILWAY COMMISSION. Exhibit Ho. 2. imeiit uioiId and cohuIiiiIdiI ._.. .._ ___ . _ ,, . !i, by and uotweeo IM D Pacillo Railway Comnany, Enatorn Division, the party of tbo 6nt put. «Dd Robert M. ShuoniBkor, MnttlioTr UBlril, Edward Miller, Jiiwph C. Bntler, Cm-Io* $ Onwloy, OilH F. Fllloy, Jnmcs ArnluT nnil SUiphnn M. Edgell, thtt i)»rtj of thl ■nooiiil parti Wltitcwrth ; >Vrjif.— Tlio nari.y of tlio socoiid nnrt. acroe and bind tlioniaclvcs to oouitruat ut ._,__ ._„ .___._. ,._- ...^ ^,._ _, . '•i.intM iMiiiip a nmt-oloBH railway, na iitiw locabiii, from tbu City of Lertvenwortli, 1 ti^_._ _.if ._..._ j„„ption of tbo completed road of itaid noropany, at or ii«m Kdunu, witli all the nendfiil atntions Kud neoeaMrv ro]Ua| .^.„.^ __,.._. , ....... ., .^^ State of KaiiHaa, to tho Jni'ictlon of the completed road of itaid noropany, at or '1 the nendrnl dtfttioas and neoeaMry k..._ ■took (not lesa than flMljOUO Id value), oomplole, as a Qnt-olriM railway, m pravidi B^nJK \li\rf laoa tuiau ^iiwvmWV ku » hiuii;, uuiupi* , — _ _.. . _^ ..._,._. ... Rtr by the charter of uid compaDy, and the acta of CoDgrcm in relation thereto ; .. nnlah said railway niid deliver the aame to aald coinpftDy lu good running onlor on d| liofhro tlio flrst day of May, 1SC6. Stoond, — In coDaidoration of tbe covoaanlA ta bo performed liy aald |iarty of tlu Hocond part, na set forth in tbe prevlooa eeotloD, the party of the lirat part agme b Cay saia party of the second part the full sum of aix liuudrod thonaand dollars, in ttal Irst Mortgage Seven per Cent. Bonds ofsaid railway company, based upon that pa' '■"" -rii—if romi to be conatructed under th la contract, and also bonds of the Count of Leavenworth, to be issued by aaid county, aniountliiK to two hundred and HI llionaand ((050,000) dollara; alao twenty -two thousand {|2S,000)dolla "' full paid ospital stock of the Uoion Pacilio Knilway Company, Easteri the actnal nnmber of niilea of railway oouatmctod between Leavenworth nniftll point of ponnootioDj at or near Lawrenoe. TAW.— It la Bcreed that the Bsid company shall, fVom lime to time, and as fasti shall bo re(juire to be signed by its President, the day and year first abovo nH| 8eat. J tioiied. ] R. H. SlIORHAKER, JOSBFQ C. lii;Tl.BR. C. 8. OBBKuey, QlLBS F. FllXBV, Jambs Archer, S. M. EooKi.L, EDWAIU) MlLLRK, fi- B. M. Daird. II. t itncsa: I!. P. RUTTun. John p. Dhvkktus, John D. pKnnr, Seerefary. I'retUtmt. U. S. PACIFIC BAILWAY COMMISSION. Kuai', iiii'l tljo tiulil imrLy of tlin flritt |iart eov nil ants atidnjin^oa wiili ilic siiiJ (inrly of the Micotiil jiiirt to occoiil tho Uttiih ttnd iirovUiiinH of aniil tM>nly, niiit in in'ctinlmioo thoreirith to ciintnwt Tor tbo parcbaae of luid landH, and uiinn iln' r<'<|iii>]:j|iiii <, i>i iheMSound |iart, or their aisifCDS, In accordanoo with tbc termB of (bis HftirriiioiiL 11 in further imilnrstood and »k''«^ that the FlratMortga^BondaafurtMuiid urn lu Ih) dvlivurMl to I be piirticsof tbsaecoiid part, m thoDecoasitieaof tbe iaidpartioAof tboMead aiid teloKrapb line sbaU be from time to time anoeptod by the Uuvmi- iiii>iit liiiii Liii-uud over to said parties of tbo Qrat part by «»ld parties of t'lv auaunil [iiiit ue liiTi^imiflBr provided. 11' said iKiiida ami a >ud part, or tbeir a „ . ^ o the said railway company, the said parties of the second part, or their.. . , are to be invested witn, wbou all tbolr ogroomeitts with rofereooe tliereto alMlIba fidly performed, eueb conveyance to be made and ntl other eipvnditu res in and kbout HHJd iHTidfl at tbo proper cost and chBracfl of said parties of the aecond i>art. It. in [iirllier iiuderHtood and ni^j'eed that as each and every divisiou of tbe railruad itiid l<tc4 'd Blate* Oovernment, it shall Im with its oijaipmentii turneil over to tba shall Iw iierfonui'd, and all the ctgiiipmeuls anil materials si of Ooverameut CoinmissloDersaud Jtoard of Directors of saiu uuioii i-aciuo naiiwaj Cuiupaiiy,Easteni Divisiou; and it is agreed and understood that all tberaUnMdMM. lHe);rapu lino herein provided to be built shall eonform In every respect to the |nv>' lilva, iiiuiis, drawings and speoitications of the said railway company j and If, Ln tlia opinion of thesaid Board of Direolorsof the party of the Hrst part, the partiaaofUM iKu«iiuu uij^u^ EtiiimiTH] uuii Huty- , __.i Carina 8. Orooloy anil Aclmplms Heier, Trnstecs under n cerlam laortgago or deed of trnat, bearing liaie July lat, clgktiMjn hunilriMl nod BJstj-alx, niade to tliem by the Uoinu Pncilfu Itallnny Cumnuny, EiMtem Divinion, p»rtLw liUH Meier and Jutin A. Stewart, TrusleeH under a certain tncirtgnao or itpeil of trust boarin); even dale berewitli, made to them by the Kansna Pooilio Railway Compauy, partioa of tlie second p&Tt Whereas tUe said lluiou Pnelllu Rai]wnyCoi_ , made and executed its certain ^uortgago or di>R(I of Iriial, bearing date Jaly flnt, eighteen hundred and sixty-six, to the said Carlos 8. Oronley anilAdotpbiiB Meltr, Trustees upon tbe railroad and tclosrapb lino of said company from tne UiMMait Kiver, al the moalb of the Knnsns River, and from Wyandotte, wcstwardt; to tha point west of the one hnudredth meridian, to which the grant of United 8tat«ii bondi' in aid of said company extends, which point has, nnon enhseqnent survey, beeo a*-' certalned to ho the three bnndrod and uinety-fonrtli mile ])oiit west of tbe Hlsaouit River and the bTouob rood from Leavenworth to the Junction near Lawrence, witb appartenancea and equipment tbei^of, tosecnro the payment of the income boDdaJ^ sued and to be issued by said company to an extent not exceeding ten tbonaBod dol> lore per mite of il« said road, and tiie application of the net earnings of lhe«aidroa4 oa tberoiu defined, after '""" - * ' "' ■" ~-' — ' ' to the payment of inten Ject to tbe cooditious iu said mi And whereas the onme of the _ ..^ _ ....,.._. , ion, was aubsequently duly changed to tbe KanaasPociflo Hallway Company. And whereoi, tbe said luinsaa Poelflo Railway Company is now engagM Id tha aoD- struotion of an extenaion of its said railroad and telograpn lino from tbe before-nmi- lioned tlireo bnudred and ninety -f<>nrth mile post to Denver, In tbe Territory of Colo- rado, a distauco of two bnodml and thirty-aix miles or tberoakouts, and with tht object of raiaingfnnda thorofar, boa oxoculod and lielivored ita certain mortffaea ~~ ileed of tritiit bearing oven date hurowith to thosald John Edgar Thompson, Adolpb Helot and Jobn A. fitonart, as Trnateea, DoviTlng as well the railroad preiniaca, ptajK' erties, rights and francbisea which are embraceil iu and covered by the abovo-omii' tioned iaDrtgat>o given to the parties of the first part as Truateos for tbe M>eartty 4^ the said luconie Bonds, as the said line of road now being oonstruct«d as aformid from the three hundrod aud ninuty-foartb mile post to Denver, and certain landtfl 8 ranted by the Uaite tbe parties of tho first part, as Trnetees, to be siiboriliuated in Uie m»L^^ uer and to tbe extent hereinafter oxpreesod. to the hen of the said mortgage iit ftvad date berewilb, mode to tho eald j>arlies of tbe second part, and to tbe aaid di millM fivebiindredthnnaand dollara, issued or to 1)0 Issued there andcr, and there boa btOtiM cordlngly stam))od upon each and all of saiil Income Bonds, exeeptiDg tbiMe to aal^ aiminiit of two bumlred and furtv Ihonaand dollara, a declaration of their boioK »nbovdlTiil..d. Now, lliii iudentnro wilncsseth, that the said partica of the flrst pari, na Trusti ■••aid, iitiiliT tbn ntuivu mentioned mortgage of July first, elgbtwn hundred aj ■*lx, aiiulc to tlieiu for tbe gecurit; of uuu\aco\nQ Uotvda, ii.nd for and on bebi ' hoidon (ifaJI tile ontataiuiing Income BoTi4ft8ccnxiA\i-3 »*\A mw\ia».'R6,\'aw ARTKMAS H. HOLMES. "1 - : sideration of the prcmiNos, and of ouo dollar to thoiii in hand ]>a:ii «-} '•^• ^»>' ■ -« > the secoml part, at and hefon* the onsoaliug and delivery of ihoj««» pn>»i :.: n . *•. -.•' ▼hereof is liorcby acknowledged, and for other goodand valr.a*''.o »-. : ^s . -: ■ v.v have covenanted, granted and agreed, and do hereby covenant, jrrnvi r.; .. ;.*:".' '- with said parties of the second part, as Tnistees nnder the above nier.: :.vi'.. iiw. r^-v^ and deed of trnst, of Jnly iirst, eight<^en hundred and sixty-six. n:»«;i* :. '•>.• --- of the first part by the Union Pacific Railway Company, Eastern l"»iv.s:.v. .-• : ■ i.* > or in respect of all and singular, tho railroiMl and appurtenances. T.,c^'> <•:■ < Ieges,propertics, rights, interests and franchises, mentioned inorivnrrns: :> M: ^».- mortgage or deed of trust of July lirst, eighteen huudri'dand sixT}-s.\. sVi .'». are hereby subordinated and made subsequent and subject to the "..f-r lm . j- v thereon of tho said mortgage or deed of tnist of evm date hereti:;y nia. : : Kansas Pacific Railway Company, to tho parties of the second par:, a* Ir-.^v.-.-* ;> aforesaid, and to tho riglitit, liens and claims thereon, of the persons ^ y.- si.u. :•:■ ' •:.• holdersof the said bonds, within the amount of six million tivc hnuortsl i::.>usj^i*. .- lars, issued thereunder, and that the said mortgage or deed of tni>: to tlf z»hr: ^-.^ • first part, of even date lierewith, and the said bonds, within the amor.::: » : s.\ i. '-i^ live hundred thousand dollars, issuctl thereunder, shall have pref«reiii-e ltmI jcr ■ lien over the said mortgage of July first, eighteen hundred and i»:x«T->:x anii .■ ■>■: : ; ■ lien of said Income Bondholers, upon all that is covered thereliv. &.« ft^.y ux*L 4*nn- nletely as if it had been actually and regularly made and reconlr*!. ariil ib< saic )v»p».'« for six million live hundred thousand dollars, issued hereunder, beiorf iht Hibii.n;. • laid mortgage or deed of trust of July first, eighteen hundriMl and 8:x?y -s.x ss.r .:ii ^u excepting, nevertheless, the rights, if any, of the holders of said or,rsTAr:i.Ju: '-:T.ir.v Bonds, or cither, the amount of two hundred and forty-one thoussud £:•* .&:s ^ :<> la^-i not expressly assented to such subordinat ion. In witness whereof, the said parties of tho iirat part have hiTeunio si i Ha r iifcn*" b^n •ealw, the day and year first above written. (.■AUI.OS S. Geeeixt "-t.*^ AiHM.nirs Mnn. -x*.: . TuE State of M i sso l* r i , > C'lti and County of St. Loui/f, S * 1^ - ^ kDOwliMlgments of deeds and other instruments, personally ca::j- l ir.rtt ? --t-^ r "^ .•? Adolplms Meier, personally known tr» mo to bo tho s;ime perso:** "■ !■ * r« in-*, i..- i—* golDg instrument, and acknowle. The lien securing this bond has been, and by tho consexiT o:' in- ordinated to a mortgage for $0,500,000, dated June, l5CP.ex«cni«i ritic Railway Company, to provide for extending the road i* I^c on such |G,!JOO,000 is mado chargeable against net earcin^b payment of interest on this bond. The Witness. The Denver extension mon^u^'wriL •• wnxi . It* of the book I have referred to. Q. What is the amount of the Denver exti million five hundred tbousnnd dollars. By the Chairman : Q. From the one hundred tli ineridiax} i* huDiIriHlth meridian to Denver, and u]«aL the entire road, it bein;^ a first mortp^rt- iWB iif^«~-iici-z- ian to Denver on the land grant; and & unstamped, unsubordinated incomt' haoaj^M^'^**^^ KANSAS PACIFir FIE«7 illOMaM*^ »t The uext mort/^a^es in j*uiii; ir gnmtmortgng^a of the Kansaf JteiMJHBvr 4 PACIFIC KAIUVAY COMMISSION. gruiit iiiortgag*! was July, 1, 1870, to AUoIplms Msicr, of Suiut Louia, and Joltii A. Slcwiirt, of Now York, it was purely a Isuid-graitt mort- K»gi.', covering -',000,000 of acrts of land, from the beginning of tho road ut KansuB City to tlio three hundred and eighticlli mile-pont. Q. Two millions !— A. About 2,000,000 acres of land. By Conimissioiier Anderson : Q. To tho three hundif^l and eightieth mile-post t — A. Yeo, sir. (i. U'aviug a gap of 14 miles between that and the other mortgage t TUB 8KCOND LANDGUANT MORTGAOB. A. Yes, sir. Tho next mortgage wafl the second land gniut mortgage. By thu (JnAlHMAN : Q, What was the amouut of this laiul-graiit mortgage ! — A. I thought 1 had stated it. Commissioner Littlek. The mortgage is $2,2oint of its connection with the Union Pacific Bailway, to the Denver Pacific Railway and Tele- graph Company, and to expedite the completion of the railroads to Denver, in the Territory of Colorado." Q. Was that act passed before the Denver Pacific had reached Cheyenne f — A. Yes, sir. The second section of it is highly important. Q. Was there any bond subsidy to the Denver Pacific t — A. Ko bond fiobsidy to any part of the road beyond the three hundred and ninety* fonrtb mile-i>ost. DENVER PACIFIC LAND GRANT. £y Commissioner Littler : Q. Was there any land subsidy ? — A. Yes, sir. By this very act the £aosas Pacific, to call it by its true name, was authorized to convey to the Denver Pacific all its rights to the lands, and the Denver Pacific ^as built by a mortgage on its road, earnings, and the land grant. By the Chairman : Q. ^rom Denver to Cheyenne t — A. Yes, sir. Q. There was no land grant from Denver to the three hundred and ninetieth mile-post t — A. Yes, sir. There was a land grant over the en- iive road. The subsidy was solely from Kansas City to the three hnn- dtod and ninetieth mile-post. That is, there was no subsidy on the Leavenworth Branch, there was no subsidy west of the three hundred a&d ninety-foarth mile-post, and there was no subsidy between Deuf^ I. S. I'ACIFIC RAILWAY COMMISSION. UE OP DENVER PAOIPIO BTOCK TO KANSAS PACIFIC CO-MrANV. By Comuiisstouer Akderson: Q. You were explaining why the stock of tbla UoDver Pacitic roadj which WHS iiiclmleil in this fiinding mortgage, whs of great sigtiiflcanc^ to the Kansas Pacilic. Please complete that explanation, — A. Alarp^ proportion of the Denver exteoHioQ bonds and the Denver Pacific bom were old abroad, chiefly at Amsterdam and Frankfort, and were then held. The Kansas Pacific Company, throngb its contracts as to tl» building of the Denver Pacific, became the owoer of witbiii three oi four shares of 30,OOU shares of the capital stock of the Denver Pacifie Beginning at that time, immediately after the opening of the road throupli to Ch<.>ycnne Q. About what year! — A. Abont the year 1871 or 1872 — the Kaai sas Pacific Company was having a very bitter quarrel with the UniM Pacific to enforce its rights on the subject of prorating passengers am freight for all business going on to the Uniou Pacific Railroad at Che; enne from the Kansas Pacific aud the Denver Pacific, or business goin| tbe reverse direction from the Union Pacific at Cheyenne the othr way. It was the ownership of the stock of the Denver Pacific thi was supposed to control that link, and it was believed by the Kansi Pacific parties that If the Denver Pacific stock, which really had i iDtriosio value at that time, sboald go out of tbe bands of the KsusH Pacific interest iuto tbe Union Pacific jnterest, we never could enfora the rights wbicb wo claimed Congress bad given to us. In the fifteeotl section, I think it is, of tbe act of 1881 will be fonnd what gave b each of the systems of the Union Pacific the right which is now very generally covered by tbe interstate commerce act. In other wonli that is the earliest bisturical schoine of th« rights reserved now to public by tbe interstate commerce act — equal rights for all conned ings railroads of the Union Pacific system with the Union Pacific It^ road proper. WAR OF RATES BETWEEN KANSAS PACIPIC AMD UHION PACIFIC. Q. On that subject I understand there was bitter dissension in tb years 1872, 1873, and 1874, between the I^nsas Pacific people and til Union Pacific people, in regard to the rates to apply to freight ai passengers to and fro through Cheyenne. — A. Yes, sir. 8o macli i that there was passed by Congress a highly pnnative act, level against the Union Pacific Railroad Company and its ofllcers, finia and imprisoning any one of them who should violate the provisions ( section 15 of tbe act of ISC^. Q. Give us a reference to the act which you now mention, or yoi cau supply it later if it is more desirable. — A. It is tbe act approv* June 20, 1874. Q. Go on in regard to tbe importance of the Denver Pacific. — A. i 1873 the Kansas Pacific defanlted upon its interest obligations. If then president went to Amsterdam and Frankfort, called meetings a the bondholders of the varions classes of bonds — land grants, fin and secoud mortgages of the earliest issue, and of tbe Denver Extol HJou mortgage — and laid before them tbe situation, showed them tl great difficully that they were laboring under in regard to doing bni ness over tbe Uniou Pacific, niid explained to them the absolute nece aty of taking care of their obligations on the Denver I'acific, and aami /ff^ to them tbe ret^titioa of tte COOUo\ \iv \\ivi ^iMi%wi '^wa&ii's? U -Dearer Piiel&e. ARTEMAS H. HOLMES. 133 "BABY BONDS.'' It resulted in the fanding agreement, by wbicb the holders of these various securities submitted to surrendering two coupons of $30 each, and half of the five next maturing coupons — the two whole coni)ons, and a half of the next five — into the principal of a coupon-bond cer- tificate; that is, the little coupon-bond certificate, commonly called Baby bonds, themselves bearing interest. As part of that negotia- tioii it was agreed that this Denver Pacific stock should be held sacred, and that if default was made ui)on the Baby bonds, the company would surrender the management of the road to two receivers, one of whom should represent the bondholders and the other should represent the junior securities — the railroad directors party. Just before, in 187G, in anticipation of it, the funding mortgage was made, and this stock was put into that trust in the hands of two of the directors, the mortgage being made to secure the floating-debt obligations which were held by the directors, and the mortgage also covered by the land notes (and these trustees received them) for the proceeds of sale of the land on time of all the land grant of the company. Q. Did thefunding mortgage also secure the certificates for funded coupons t — ^A. Oh, no; the funding mortgage bonds were issued to the floating debt holders, who were directors, and their associates ; and the fanding mortgage put in jeopardy the control of the Denver stock, which had idways been represented and was always believed to be vital to the first mortgage security holders, so that they were stripped of their best security by the funding mortgage, which was made within thirty days of the default under their funding agreement. By Commissioner Littleb : Q. Was the form of that Denver stock changed in any way by this fanding mortgage, or was it continued as stock! — A. The certificates were simply transferi'ed to the trustees. By Commissioner Andeeson : Q. The stock, as I understand it, at this time belonged to the Kansas Pacific and was delivered by them to the trustees of the funding mort- gage, and was enumerated in the schedule as a part of the security to l>e held by the trustees for the holders of bonds issued under the fund- ing mortgage t — A. Yes, sir; I wish also to say that the terms of the fanding mortgage were the most arbitrary and caustic that I think I have ever seen in a mortgage. The interest was at 10 per cent., and it permitted, without notice, a sale by the trustees, acting even by an at- torney in fact, at public or private sale, to anybody. By Commissioner Littleb : Q. Without a foreclosure t— A. Yes, sir. By Commissioner Andebson : Q. You say you have not a copy of that instrument with you ? — A. I thought I had, but I do not discover it yet. By the Chaibman : Q. The funding mortgage is the mortgage referred to by you over the whole road as $1,600,000 1— A. Yes, sir. TOTAL AMOUNT OF KANSAS PACIFIC LIENS. Q. Then you have enumerated in mortgages and bonds and the Gov- ernment loao, np to that time, $28,588,0001— A. That is about right; and there was an addition of the Baby bonds. 134 U. S. PACIFIC RAILWAV COMMISSION. Q. What do tbey ainouut tot — A. I am unable to say, because tk were the ovenlue interest; two principal coupons and half of the fi. next coupons put into a principal sum. They ultimately amounted a great deal of money. By Commissioner Anderson : Q. How were they secured I Was there a funding contract f — A. original coupons, the two cut off and the five next coupons, were C. posited with the Bank of Commerce uiider an agreement, reserving rights, so that a foreclosure could take place on the several mortgage In other words, those coupons that were cut off were held in abeyam They were not paid. They were obligations, which, if the fundi agreement failed, would be in default, so that a foreclosure might prosecuted. By the Chairman : Q. Will you furnish us with the amount of the " Baby ^ bonds t ^4, It was a variable quantity. At that particular date I could, perha ps, have done so. Commissioner Littler. The amount would be easily ascertained^ iT we knew the number of bonds from which these coupons were takei^^ . The Witness. The answer to that is there had cot everybody cf^ Jne in. Only a large proportion of the principal of each of these issuer of bonds united in it. By Commissioner Littler : Q. What became of the outstanding ones that did not come in t -^* They held their peace. We afterwards paid them all off. By the Chairman : Q. Up to this period you have nearly $30,000,000 on this road fr'O *" Kansas City down to Cheyenne ! — A. The document in my hands sho 'V«'8 that the holders of $15,609,000 in par value assented to that fundi k^"^? agreement. But then they continued to come in after that, and tlx^^>' were a variable quantity. Q. I just wanted the amount up to that date. You say it is ab^^"*^ $30,000,000 ? — A. I think I have explained the question in regard ^^ the funding mortgage. That is why it was considered that the Den "^f^ vert — A. I think it was early in 1871. Q. And operations were commenced ! — A. Yes, sir. Q. Was it able to do a Large share of business immediately, or W9^ hampered by the Union Pacific ! — A. It was solely to Denver, but> had a large business to Denver. If my recollection serves me, Colorado Central was not then completed, and the Kansas Pacific its own way to Denver; but from Cheyenne, east or west, the going to Cheyenne and desiring to go on its way, was blockaded. n- ARTEMAS H. HOLMES. 135 0- Then, as I uuderstand it, the relations that determined this qaes- >n of through freight, and the general relations at the time between le Kansas Pacific direction and the Union Pacific direction were hos- let — ^A. Entirely so. Q. Do you know who then was president of the Union Pacific t — A dney Dillon. Q, Do you know who was the president of the Kansas Pacific t — ^A. obert E. Carr, I am quite sure, altbough during his absence there was temiK>rary president. Adolphus Meier or Bobert E. Carr, I am sure, as acting at that time. Q. Who were the directors actively connected with the Kansas Pacific i that time? — A. Bobert E. Carr, Charles S. Greely, Adolpbus Meier, )hn D. Peny. That reminds me that it may be that John D. Perry as, during a part of that period, president. Q. He succeeded Mr. Carr, did he not, as president? — A. I think erry was twice president, with an interval in which Carr was presi- ent; but Carr was president in 1876 and 1875. The others were Ste- ben M. Edgell, T. W. Meister and Benjamin W. Lewis, jr., all of whom ere Saint Louis gentlemen. Cyrus W. Burnham was also one, I be- eve. DEFAULT ON FIRST MORTGAGE. Q. You have stated that the company made default in the payment the interest of its first mortgage bonds. About when did that oc- Tt — A. In the spring or fall of 1873, possibly in 1873. The two cou- ghs, the principals of which were funded, were I^overaber 1, 1873, and ay 1, 1874, or tbe nearest dates thereto ; tbe coupon dates of the .xions mortgages being. the first day of almost every month in the year. Q. This road subsequently wont into tbe hands of a receiver?^ A. is, sir. CJ. Can you give mo the date of the receivership ? — A. Tbe bill to reclose the Denver extension mortgage was filed on the 3d day of ::»vember, 1876 1 By Commissioner Littler : enver I'acitlo a single mortgage of about $25,()0() a mile, and -ita stock 1 — A. Yes, sir. The mortgage of the Uenvei- Pacitic will be fnuntL at page 180 of the book of indentnrea 1 have referred to. The wliol« issue of that mortgage was $2,5110,000, HECEIVEBSnir OF KANSAS PAOIFIO, Q. Was the a|»pointnientof the receiver applicublo to the Denver I'a- cillo, or only to the Kansas Paciliot — A. It is only to the Kansas Pii. ciflc. Hut tho Denver Pacilie was then being operated under the con- tract vith the Kansas Pacitic; so that the receireraliip extendetl, tQ tliat extent, over the Denver Pacitic. Q. At the time of llie apiwintmeut of the receiver can you give n\ approximately, 1 he total incumbrances of ttie Kansas Pacific and of the' Denver Pacific, and the toial stock of tho Kansas Pacific and the Den- ver PaciftcT — A. I have stated them heretofore in the examinntiou, Q. Wo want tliem in one group, if you will give Ibem to us, so that we will not Lave to carry it iu onr niiuds. — A. I will not bo nblo to do BO without computation. Six million three linndred and eighty IhoU' Hand dollars was the actual amount that was issued nnder the Denver esteueion mortgage. The difference between $G,^80,U(IU and tho tot^l issue was reserved to talie up, I thiuk, the income bonds, with the res- ervation, &c., 80 that tho aetnal issue was $6,3$0,U0O. Q. So that, generally speaking, the actual amount named in theM* mortgages cannot be assumed as representing the correct iudebtetluess of tlie company, without examining to see what bonds ma^ bo re*en*ed' for retiring undetlying liens. Isthatuotsnf — A. Yes, sir; bnt not to any very general extent. I thiuk Iho report of the Kansas Pacific, nt page 34, for the year ending December 31, 1877, correctly Ktatos it. Q. That js substantially as it stood when the receiver was appointed in 1870 f — A. That is substantially the same, except as to tho intcre«t wbJcb aecraoi}, which is stated iu the second schedule ou that page, be* tiFpon 1870 and IS77. AftTfiMAS tt. HOLMES. 137 TOTAL INCUMBRANCES OF KANSAS PACIFIC. Q. Please give us tbe totals, so tbat we may have tbem before tbe Commission, as taken from tbat import. — A. Tbe total amount of oat- standing bonded indebtedness of tbe Kansas Pacific, on December 31, id77, as stated iu tbe report, is $22,181,600; and interest on bonded debt, doe and unpaid, upon tbe various mortgages referred to in tbe total amount outstanding mentioned above is stated at $4,585,759.85. Q. Wbat was tbe total stock of tbe Kansas Pacific f The Chaibman. And the floating debt, if you had any ? Commissioner Andebson. We will get that separately. Tbe floating d^bt floated away. A. I cannot, with any accuracy, state tbe floating debt at tbat time. Q. About $14,000,000, was it uotT — A. I think not. I am quite con- fident tbe stock was $10,000,000. The Chaibman. Tbat covered tbe whole road from Kansas City to Oheyenne, on tbe main lineT Commissioner Littleb. No. The Witness. From Kansas City to Denver. Q. Ten million dollars f — A. Let me get that right; I do not want to state it erroneously. Q. Was there any stock from Denver up to Cheyenne on tbat \)rancbf — A. That was Denver Pacific stock. Q. What is the amount of tbat f Commissioner Andebson. A few shares less than thirty thousand Bbares, I think you stated. A. That is the amount which the Elansas Pacific held. It was about ^000,000 of stock. Q. Tour million dollars on that short road T — A. Yes, sir. In addition to these mortgages there were the Government bonds on tlie 391^ miles at $16,000 a mile, amounting to $6,304,000. By Commissioner Andebson : Q. Do not the articles of consolidation recite the number of shares! — A. Yes, sir; it is $10,000,000, divided into shares of $50 each; two hundred thousand shares, at $50 a share. ' Q. You say the capital stock of the Denver Pacific was about $4, What were tbe subsequent operations of the road uud(*r tbe re- ceivership, in regard more esi>ecial]y to its relations with the Union Pa- cific Y Did the contest as to the discrimination continue f — A. Yes, sir. The receivers, directors, and those most interested in the company and its Recurities continued the quarrel and contest in Washington, to en- force the alleged rights of the Kansas Pacific to prorate. By Commissioner Littleb : Q. Who were the receivers f — A. Henry Villard, representing tbe for- eign bondholders and first-mortgage bondholders here, and Carlos S. Oreeley, representing the Saint Louis party and the junior security holders, and the directors of the company. 138 U. S. PACIFIC RAILWAY COMMISSION. KANSAS PACIFIC AND UNION PACIFIC CONTROVERSIES IN COURTS AND CONGRESS. By Commissioner Anderson : Q. Yoa say this controversy was carried to tbo balls of Ck>ngre88, in Washington t — A. Yes, sir ; and in the courts at Omaha, and elsewhere. Q. Who were the prominent persons engaged on both sides in that controversy? — A. It was all done in the name of the companies. A company against a company, aided by the parties in interest, and the bondholders! including the people who owned the Denver Pacific bonds. They were also represented by counsel. They were foreign bondholders. Q. What were the prominent names tha^ were arrayed against each other in their determination to prevent the prorating at Cheyenne, on one side, and the determination to procure it on the other? — ^A. The Union Pacific directors at that time, and their allies and associates, who were largely interested as stockholders and bondholders, and, on the other side, the Kansas Pacific directors, and the bondholders and security holders of that road. Q. At that time, in 187G and 1877, or 1876 alone, we will say, were there any persons who had a common interest in the two roadst — A. To some extent. The two companies had interests in common before Congress in some regards, particularly in relation to theThurman fund- ing bill, and also in regard to their claims before the Departments and against the Government for Government transportation and mail serv- ices. Wherever the acts of Congress afifected the companies alike they were glad to aid and did aid one another. Q. I refer to another matter: Were there any prominent stockholders of the Kansas Pacific in 1870 who were also large stockholders in the Union Pacific ?— A. Not in 1876. Q. Were there any persons in 1876 who hold common offices in boti companies? — A. No, sir. Q. So that in that year the directorship in each company was entirely distinct from the other? — A. Entirely. Q. And their relations were hostile? — A. Yes, sir. Q. Except in such matters as you have alluded to? — A. Yes, sir. MARKET VALUE OF KANSAS PACIFIC AND DENVER PACIFIC SECURI- TIES. Q. Can you tell us about the market value of these various securities in 1876 and 1877, without undertaking to be precise? — A. Beginning in 1873, and from that time until the end of 1876, the market value of all the securities I have mentioned was extremely low. The Kansas Pacific stock was $2 or $3 a share, practically valueless; so regarded. The land-grant bonds, seconds, were purchasable at one time within that period at about 10 cents on the dollar, with all tlie interest con- nected with them. The Denver Extension bonds were worth about 40, practically, at that period, and ranged from 50 to 70 between 1876 and the early part of 1878. The first mortgage bonds of the railroad com- pany, although they were prior to the lien of the Government, were selling considerably below par. The company's credit was bankrupt. By Commissioner Littler: Q. Were all these securities listed on the Stock Exchange here? — A. Many of them were; most of them were. ARTEMAS H. HOLMES. 139 By Commissioiier Anderson : Q. Was the DoQver stock salable dariDg these years at aTlt — A. Oh, bo; the only purchaser in the world for it was the Union PaciQo party. Several efforts were made to obtain the ownership and contrt>l of that, and various attempts were made in the courts to disunite the I^Dsas Pacific from the Denver Pacific Q. How early were those efforts made?— A. The funding mortgage was cue of the first efforts in that direction, some of the floating debt of the road being held by some of the people in the interest of the Union Pacific, who had advanced moneys or credits. Q. The funding mortgage was in 1874, was it not? — A. Eighteen handled and seventy-six. Q. Just before the receiver was appointed f — A. Yes, sir. It is quite possible that in the year 1875 or 1876 there were one or two Union Pa- eiAc directors in the Kansas Pacific, but it was a mere act of courtesy. There were no actual interests. I do not remember; may be it was in 1877. IMPROVEMENT IN BUSINESS AFTER 1877. Q. Did any improvement in the character of the company and the bosiness of this corporation take place; and, if so, whenf — A. Begin- Ding about tlie first of the year 1877, a marked and decided increase begQD, which at first was gradual. The limit of the fertility of the 8oS of the Kansas Pacific in 1876 and 1877 was considered to be but a comparatively short distance west of Kansas City. The company had previously, and the receivers followed suit, aided in giving away seed to people who endeavored to make the experiment of grazing cattle, and the receivers helped and joined with some others there in breaking up a lot of land to see whether they could, by breaking it up and by sowing it, produce a change, and by the time 1878 came along Uiemoviog line had gone west 100 miles. To-day tbat part of Kansas is the garden field for grain and wheat, which was in 1877 and 1878 regarded as utterly valueless except for grazing purposes, and mighty poor for that So that now clear into Colorado the fertility of the soil is developed, and it is of great value. With this development came immigration, and with the immigration came the purchases of lands, and the activity and prosperity of Denver began. In 1878 we began to see daylight out of what was formerly an almost inextricable confu- sion of mortgages, debts, and bad credit. EAPID DEVELOPEMENT OF AGEICULTUEE. Q. How rapid was this development of the lands and the act of re- claiming them T — A. It would seem tbat it was almost step by stei>. That is, you would rarely find 50 miles of interval of prairie. Taking it atSatina, for example, as the last place on the road where they raised any wheat, some would buy lanas within a mile or two and break it up, and immediately it was found to bo fertile. The theory of the time was, that daring the vast number of years while this was a prairie country, tbo prairie fires and the buffalo grass together had resulted in forming a onrface varying from 6 to 9 inches deep that was impervious to the rain ; and the rain fall was very small. But as they turned this up and the surface rotted it was a natural manure, and as the growth of immigra- tion and the use of tJie soil continued westward the rainfall increased. 1 believe the theorj baa now been established by the tesoMt tJtok.^ rs/ifM ia Kansas has increased tremendously. It waA q&bo tXu^ 140 I'. S. PACiriC GAILWAY COMMlsRFOS. theory of some that tlie unbroken sileuue of llie priiirivit jireTented thft atonn cIouiIh from coming, ami that the very buililitij; of tLo roads and) the ruuuiug of trains broke the silence of the atmosphere aiu! creatoli currents which prodnced rain. But, at all events, whatever the theot^ was, tlie result was demonstrated that the country, instead of being ■ ilesert, became a garden. * Q. Then, as I uuderstand it, tho area nf feitility and the population of this district incrensed in 1877 and ims, moving gradually westward. What effect did that liuve ui»on tliu earnings of the road, as yon remem-' her them t — A. It affected tlnsin very favorably ; and at the sauio time' tbi- ciitlki inisiness of Texas and New Mexico began to allect the roa«l 118 will v(!iy materially. We had very long biiuUon cattle, audtberube* gun tli(> Hiruggle. Tbo bnlldiiig of the Atchison, To)>ekaand Santa F4 liolpcd us very mncb. The Denver and Uio Urivnde began bringing U new business in that directiou, and there was a tide of immigration and liroaperit.v which was tremeudous iu comparison with the dreadful d*< pression which prevailed as to fW:ight and trafllc and passenger and ■ ngricnitnral and stock interests between 1872 ami 1876. URANca LINES OP KAN3A8 PACIPId. Q. Up to this point, what branches, if any, connected with the Eaa^ BUS raciflc, had been constructed, and how were they built; bow did tboy eomo to be built t — ^. One of the earliest brunches was the Joti«i tion City and Fort Kearney, if I remember right. That branch, ta< gether with the Arkansas Valley, and, indeed, all the branches of tiu Kansas Pacific, as they existed in the years 1878 atid 1870, were thf resnlt of a combination of circumstances whereby tho road was elthtt liersunded or conii>ollod, in self-defense, to aid iu tho building of tf branches. For example, I remember that the receivers were urged ai persuaded and coaxed t<] aid, so far as they could, in building one llie branches which ran np through Concordi.'V. The tide of immlgi lion Bct in there. It was about 80 or 00 miles from the Kansas PaciOe; if wo did not get there somebody else would. If wo did not provii the territory tliere with transportation, iu and out, roads from the Mi souri Kiver east would do so. And much of such iuHuences were beil brought to bear in other directions for the rest of the branches. Tl. commnuity itself would start a little road. The habit was then flrmj, llxcil upon Kansas of granting aid in county and town bonds ; and remember as to the l)ranch to which 1 referred — I have forgotten tt mime for the moment — that 1 was i>ersnaded to unite in an effort to < tain from the court the privilege of using some old iron which we w< taking up uud some disused tics (short tics, culls, material that vt of little or uo value to us) for the building of this branch. I went b| through the country and looked it over with a party of gentlemen i» terested iu it, and the receiver got authority from the court, and go) back the bonds of the little branch road, and also thn bonds granted la the counties as county aid. That was true of the Solomon Valley roai£ That was true of the .lunotion City and Fort Kearney, and the ISaiiai and Southwestern. The Arkansas Valley was on a little different baslt that was built by some Baiut Louis people, and wo found it thoie. was much ahead of its time, and finally it became a v-aluelesa rood. BEPARATE OUGANIZATlnKS FOtt BIIASCUES. Q. D(i 1 understand all theso branches ha tlieir owii ? — A. Ves, sir. LAi ARTEMAS H. HOLMES. 141 Q. And their owq system of bonds and stock T — A. Yes, sir ; and in flomo instances they were represented by prominent people in the dis- trict, partly through courtesy and partly because of their aid in obtain- . ingthe assistance from the counties and towns, and also for the reason that it was of necessity, under the laws of Kansas, that a certain num- ber of the directors of the roads should be citizens of that State. By the Ghaibman : Q. They were all built on the aided branches of the Kansas Pacific to the 3Mth mile post The Witness. Was that true of the Arkansas Valley ? The Chairman. I am asking you. A. I think with the exception of the Arkansas Valley that was true, because that was where the development of the road was. The fact of itB being aided had nothing to do with it. Q. Except on the question of merging, you might have considerable to do with it in your settlements with your branch roadf — A. I mean that did not enter into consideration at the time. By Commissioner Anderson : Q. The considerations were the demands of the residents and the im- mediate necessity of the territory f — A. Yes, sir; and the danger of baTing our territory -invaded by companies which might begin feebly, as the Atchison company, for example. The Atchison road could have beeD throttled for $40,000. It was a little weak road that ran down there, whidi devdoped and increased — and got credit, and capital, and interest with the people — into being a greater road than the Kansas hicific in a very short period of years, and it was seriously contem- plated at the time of buying them out and controlling them, to prevent the interruption of what we regarded as our business in that territory. Q. As a matter of fact, all of these branches are on the eastern di- vision of your roadf — ^A. Yes, sir. Q. And you say that was because that portion was first developed T — A. Tea; because that was where the demand was. Q. Do I understand that the business of that end of the road was more active than that of the other end! — A. Oh! very much. It was practically a barren desert, with not a field of wheat or anything else west of the 394th mile post right up to the city of Denver itself. The only business of the western end was through Denver — Colorado busi- ness—and a little local cattle business. Q. Can you enumerate these branch roads and state the amount of their bonds and stock? — A. No; I am unable to do so. Q. Can you refer us to any source from which we can get that infor- mation Y— A. Cndoubtedly ; the Union Pacific office, or Mr. James M. Ham, of this city, can do so ; I knew at the time, but it was not within my province. HISTORY OF KANSAS PACIFIC PRIOR TO CONSOLIDATION. Q. Under the subsequent history of this rond I understand that all these bonds and stocks went over to the Union Pacific through the ooDsolidation with the Kansas Pacific. — A. Yes, sir, and a number of others which have been referred to, and which are not properly branches of the Kansas Pacific. There is another gentleman here, Mr. Amos H. Calef, that I will refer you to for information, lie was for many years connected with the liansas Pacific road up to the Um^ ot tU^ w\xto\v mhOf 142 U. S. PACIFIC RAILWAY COMMISSION. • Q. At the period of which yon are now speaking,- did you represent or were you in communioation with a number of the holders of the vari- ous classes oi securities that affected the Kansas Pacific and tiie Den- ver Pacific! — A. Beginning in the early part of the year 1878 1 became so connected, and during the early period I was in constant connection with the bondholders and security holders of all kinds of the ICansas Pacific through my relationship with the committee of nine who were conducting the foreclosure and through my relationship with the re- ceiver. Q. The committee of nine represented whom T — A. The Denver ex- tension-mortgage bondholders. Q. Who was the chairman of that committee? — A. Louis H. Meier. Q. What other interests were represented by committees or by prom- inent representative holders at that time; I mean, of the other securi- ties?— A. We had no trouble from the mortgages which were the prior ones; wliich were like the statutory lien. They were all regardedl as safe, and would take care of themselves. The representatives of the income bondholders were the source of very much concern. They oc- casioned many litigations. Q. Who were they t — A. The Saint Louis people, as a rule, were the principal holders of them ; and the holders of the funding mortgage bonds caused us a great deal of trouble. There was a great deal of litigation about that. Q. The same Saint Louis people? — A. These same Saint Louis people; so much so, that we paid the interest on the funding mortgage bonds once, I am not sure but twice, by the direction of the circuit court, although they were junior to everybody else, in order to prevent the consummation of the cut throat provision in that mortgage in relation to the Denver Pacific stock. Q. Then tliero were, Jis 1 understand, constant litigations and dissen- sions between the representatives of these different securities ? — A. Yes, sir ; one may say so, and with the representatives of the Union Pacific. There were litigations at Denver, Colorado. Q. Please describe how those dissensioDs developed, whether they ul- timately culminated into an arrangement for pooling all these different interests? — A. Yes, sir; with the advance of the securities and the in- crease of public confidence in the road, and particularly in the change of heart that took place in the Union Pacific directory, who were ani- mated, as I suppose, by two reasons : One, the apprehension that we would succeed in Congress and in the courts ultimately. EFFORTS TO ENFORCE THE UNION PACIFIC TO PROBATE. (i. Succeed in forcing them to prorate? — A. I'es, sir; and the otlicr^ infiuence was their belief that the property would very soon, by the do- - velopment of the country and by the sales of land and increased busi- - ness, become so valuable that the securities were a wise thing to pur- chase, and perhaps also in the latter part of the period by the influence s of their desire to form an affiliation and close connection with the Kan- - sas Pacific, and unite the two interests, so that they could protect their- own territory from the incursion of other railroad enterprises. It finally " resulted in interesting the various security holders of all classes. One* gentleman might perhaps own four different classes of securities, an- other gentleman would own two, another gentleman, who was an inti- mate friend and associate of the two I have spoken of, wonld own iSM one class — all stock or all income bonds, or all funding mortgage bondsLi- ARTEMAS ]I. HOLMES. 143 Bat tbe appreciation goiD^ on and this change of view continuing, and the values of these securities increasing, finally brought them together opon a plan and theory that they should arrange a schedule of values of these securities and agree what rate they should be taken at and bandi them all together, and use the entire accumulation of such de- posited securities as a means to carry out what was then thought to be the only ultimate end, a foreclosure of the Denver extension mortgage, which would foreclose the income and stock, and the funding mortgage, gnd the Devereaux mortgage, and the land grant, and put the roa(l upon a sound basis. That arrangement I know was formulated. It vaspat in writing, and it ultimately furnished the means by which the Union and Kansas Pacific parties were affiliated, and the foreclosure gait brought to a termination, and the ownership ot a control of these lanior securities and stocks placed in the hands of the Union Pacific parties, and the foreclosure suit brought to a successful termination in this, that all the prior mortgages, including the Denver extension mort- liago, received their interest, and the indebtedness to that extent was cleaned up, the Denver extension mortgage making a concession of re- dacing its rate of interest from 7 to 6 per cent. BATES FOR FUNDING THE SECUEITIE^. Q. Please describe when this arrangement of preparing the schedule of rates at which these different securities were to be funded was reached t — A. It was in the spring of 1878, and the paper which was then signed was dated, I think, the 24th of April. Q. By whom wns that paper signed f — A. I have not the original. I do not know where it is, but I have a cop3', which I prepared myself largely. Carlos S. Greeley, John D. Perry, John P. Usher, Adolphus Meier, B."VV. Ijewis, jr., D. M. Edgerton, S. M. Edgell, Henry Villard, Botot E. Carr, F. W. Meister, Artemas H. HolmeK, Sidney Dillon, Jay Gould. The holdings which were then signed for were subsequently increased very considerably by the action of the parties and by the proi)er aotiiority to bind the parties thereto. So that ultimately that combina- tioD represented the ownership of $784,000 funding bonds, $754,000 of the second land grant bonds, $75,000 of the Leavenworth Branch bonds, $67,000 of the unstamped income bonds, $2,011,400 of the stamped in- come bonds, $450,000 of the first mortgage bonds of the Arkansas Val- ley Railroad Company, and a very large amount of the stock of the Kansas Pacific. I should think it was three-fourths of the issue. Q. Yon say you have a copy of the agreement that was made between those parties t — A. Yes, sir. Q. Will you produce it for our inspection! — A. Yes, sir [producing the paper]. Q. Doe8 the paper which you have handed us show the relative in- terests of each of the parties signing it ? — A. At the inception ; yes, sir. Q. It is the schedule annexed, is it ? — A. Yes sir. Q. These were the respective amounts they had in each different se- Becttrityf— A. Yes, sir. Q. Have you any paper to show the increased interest of these dif- ferent parties! — ^A. No, sir; the original papers, I think, soon left my possession and went into the hands of the executive committee, and the papers I have shown you are copies which I have found in my office. Q. After that agreement was made, how was the business of the pool managed! — A. By a seven-tenth interest of the depositors of the pool, Q.Did they meet regularly! — A. No; there was no regoloEly ml- MNweed meeting. Tbe whole constitution is that whicli you \iV?^ tMdu 144 U. S. PACIFIC RAILWAY COMMISSION. Q. Did they select a chairman f — A. No, sir ; it ultimately resulted in this, that all the assets to which that relates were put into the hands of Messrs. Dillon, Sage, and Yillard, I think. I know at one time they were in njy custody and then they were put into the custody of othew. Tiio ultimate result of that was that the Union Pacrific party having bought out the Saint Louis interest — the Kansas Pacific interest— tliey were practically in an overwhelming majority in interest in that com- bination. TBANSFEB OP SAINT LOUIS INTEREST TO THE UNION PACIFIC. Q. When did that transfer of interest from the Saint Lonis people to the Union Pacific people take place 1 — A. I think it must have been in the latter part of 1878 or early in 1879, and my recollection is thatitdid not take place as an entirety ; but, as Mr. John D. Perry came along, for example, and made an arrangement with someboling agreement which looked to the unity of the management of the two roads in common. lerring to this stock of the Denver Pacillc 1 — A. In the month of Jauu- ary, 188t). Q. By whom were you requested to bring that KuitT — A. TheKaiuai Pacitlc Company. Q. By whom, in person, were you reqncsted to bring that snltt— Mr. Sidney Dillon. (j. Did he come t^ your odicc, or send for you f — A. I visit sent tot Q. Where did you got — A. To the offices of the company, or to Jodgf DillonV offices, which were in lite same bnihling. Q. In the Western Union building T — A. I do not recollect wlietbGI they had then moved to the Western Union building, or whether tbvji were still at No. 80 Broadway. By Commissioner Littlbp, : EQ. In this city?— A. In this city. I By Commissioner Andeeson: Q. Who was present at the interview T — A. My first intervic with Siduey DiJlon. and Judge l>i\Vo\\ a& m>* ¥,wvw;twy officfec. 148 U. S. PACIFIC RAILWAY COMMISSIOS. know that at tho time tbn fuuding mortgage bonds were all in the pcmkI seHsioii of Ooald and Sage us trustees of the mortgage. Then-fore tbi fiindiDg mortgage no longer covered the shares of stock of Iho Denvi ' I'ftciflc. Q. And the only title as against the Kansas Pacific to tho Denvi stock was in tho trustees of tho consolidiLted mortgage t — A. Yea, si Q. Did Mr. Dillon express to you that hedesired these proceediugs t be hastened f — A. Yes, sir; he 8tat«d to mo that he desired thebusioea^ to bo done with as mach expedition as possible, and I was a«ked hoi long a lime it would take. Q. What reply did you make T — A. I said that if the trustees tial iuitt«d their rights to the court, and if the proofswhichl thought coal speedily be made were made to a referee, that a reference could bo hfl within. a very short time, that is, a day or so after tho issues wei framed ; and that if the issues wore promptly framed anedition, and asked Mr. Ynnderi>oel if he could not give it lii immedialu attenlion, to the exclusion of other business as much as poi Bible: imd ho said he would, but ho Avould hivve to act through Mr. A moud Ooodwin. I think I exhibited a draft of my complaint to M Goodwin, and I served the complaint, doubtless, the same day, the 20tl Q. On the trustees! — A. Yes, sir. Q. Personally, or was there an appearance and admission by attoi ney 1— A. TJie answer was served, at least it has indorsed upon it, i my own handwriting, " Keceived Jan'yi'Oth, 1880. Admitted scrvio A. U. 11." ^ Q. That is tho answer! — A. That is the answer i so I must have cooJ ferred with Mr. Goodwin, »nd the chai'actor of tho complaint was dMJ terniined upon before it was actually served. n Q. The answer substantially submits tho prayer of tho complaint ta the court! — A. Do you wish to have any part of it referred to I THE COMPLAINT. :Q. Yes, sir. Givcusannndcrstnndingof thcprayerof Ihecomplatut^ . The complaint recitCH the character of the coqioration, the Kaiisa aeiSo, and that it is one of thoac euV\t\eOi. tn ¥.\\aTfe mya'aXiaw'dVa' ^"^ ARTEMAS II. HOLMES. 140 advantages of the acts of Congress, uieauiug the Pacific liiii1n>alainr.ifi. in the estimated value of its property and assets, at a very small snm : thatthe Denver Pacific Bail way and Telegraph Company is the samt- company mentioned and described by that name in the act of Congrt^i^ entiUed, &c., approved March 3, 18G9, and also in the act of Congre^. Jane 20, 1874. It states its bonded debt and the capital stock : uiai that company has been in default in the payment of its first mort^:u*f interest coupons for more than two years ; all of which is further slioiri by the affidavit of A. H. Calef, hereto annexed. SIXTH PARAGRAPH. The sixth paragraph is that if said shares of stock remain in ihc haTui- of the trustees under the mortgage above referred to, they wil aa. little, if anything, to the value of the mortgage securities, as n- ^'• dendsare likely to be received therefrom; and that so lonr£-«^.* shares of stock remain in the hands of the trustees thereof thf-'K-- • of no financial value to the company, but that if they art- li^.vr the company the i)laintiff can and will avail itself of an opTi.rm nse the same to its advantage and to the consequent ndva:.Tiir credit and stockholders. SEVENTH PARAGRAPH. The seventh paragraph is that the security ie? amn -t: '^-^ withoQtsaid shares of stock, and that the annual e^msi -^ol *- of the plaintiff are more than sutticient to i»ay al': n- t-:'^ -= -- estf and other charges, together with all uectt8«a' ei-=r- penses for operating expenses, repairs, rencwAL- a — *-Tr-j - proTements; that the stock of the plaintifi' market for about par. EIGHTH PARAGEATT Q. That is, the Kansas Pacific ? — A. yt*^ir: iff has applied to the defendants, MeliB^*^ ««■ to release said shares of stock from tii«- Died said application with an offer V* erty for which the same might Iia bqI orproperty of equal value, and in hei; and agree that of the $30,000,000 il and by virtue of said mortgage fident in value to replace the /&/ tlie securities of said B. PACIFIC RAILWAY COMMISSION. of the said iiiortgtigc ; that the iloriMidaiit«, <9ouhl aud Sage, vuplie and alleged that they havo revised, and do now refuse, to comply thoi with. A oopy of said application and their reply is nniiexed, aud innrkt Gshibit G. Wherefore the coiuplaiut prays that the value of the sharcJt lunj I aBcertaiued and dcterminod, prorided that the same shall remain I trust, and that your trustees may be directed to deliver said Hhare« < Ht«ck and receive the secarities or property for wliicU the same BbnII t sold or exchanged of equal value, or upon the plaintiff biudiug it«elf n I to issue at anytime bonds secured t)y the mortgage herein act forth amount equal to the ascertained value of said shares of stock mo d I leased, and for sUcli other or further order, relief, or decree in the prei ^^^Ises as to the court may seem just and proper. f CO r th t TBE ANSWER. ' The answer of the trustees admits the allegatiuus contained iu tl complaint, except the allegations contained in paragraphs (! and thereof. They allege that they are unable to admit or deuy the alleg tions contained in paragraph 0 or 7, and are advised by counsel that is their duty as trustees of the mortgage to do nothing which will i might impair the amount or value of the property covered by mortgage. Wherefore the defendants pray that this court will instruct or direi them in the premises as to the present or probable value of the shan of stock referred to in the complaint, and that the shares of stock, fff leased or delivered to the plaintiff by tlio decree or judgment of til court, may be released and delivered oidy upon such terms and eou4 tions OS will preserve the value of the defendant's trust nnimpairud, * It is verified by Mr. Gonld. Q, What was the next step in that litigation f — A. 1 requested Vauderjtoel's firu), through ifr. Uoodwin, to agree with me upon referee, and wo selecter, iicucoediiigs, tliu urdoc of roforcncu, tcrtiiiMmj, M tho rrporl and opinion of Hurnco M. IIitg);Ii«, ooq.. tbo ruferoo beruiu, after bearin Mr. llolmos for the motion, ami Mr. Uomlwin of uournwl for botb dofbndanta; it ia Ordtrcd, adjudged, and dterecd, 'fbat upoii tho liaue and dolivury by tha plklntl cniupaD; to the derondantH oatrustocaof tbo lint ooniiolidatod mortirago of tbo plklq iff conpan.v, datud May Itit, 1)^0, of livo bimdrad tbaasand doTlara (^00,000) (tiDoiint of tlio bonils Buourod by said mortgage, togatber with tho c^onpoQS of M bood« dtie KoTombor l«t, ISTO, nnd all anbaonuont coapons nnnexad, that tha tmD nlDO tbouMtnd ninii bundrod and eigbty-nix (8!I,9SG) shatM of tbo capital ataakof ' Doiivor PaciQo Railway and Telugrupb CompaDy, nut forth and doMribud to thao< plaint boroiu, be fortbwUb rcIoiMPd by tlio dofeudanto from tho tnivt croatod bj ■ inortgnKe, and that the defendants forthwith duliver tho cortiiloat«B for Mild alia, ■if Block to the jilaintitr company, and that tlte said ettrtiftoatca for aaidsharea of ato iind the Mid flhores of stock be, and the Hamo licreby ore, forevtr frood and rolei from tbo trust created by auld mortgage ; and it la nirtbor Ordered, a^indgsd, and dcomed, That npon receipt by dofundantn from tho plaii company oftne above dHauribedbonda, together with tbeconponaor intorostwiuT' l.lioruU) annexed, aa above provided, tlieiuld bonds and naid conponA or intorcat wi rnnts be forthwith cancelled by tbodefondantalnsomecffeotnalandBabstantial mi uer; and it in further Ordrred, That the ooatn and diaburaomontA of tbia action bo not nllowed to oltl party " ajtainat tho other, except that tho plaint iff do pay to the nttonicya for t iIofundaDta an allowance pnrauanC to llteprovlBlona nf law in that iiebalf thoaiitn live bund rod dull an. NeW York, Jannary Hard, 18S«. Q. now 800U after tliat decree was entered was tbe stock actaall delivered to tbe Kansas Pacific Company? — A. I cannot say. Id livered a copy of it to the company. ARTICLES OF COKSOLIDATION DATED JANUARY 24, 1880. (J. Do you know wbotbor the articles of consolidation between tt Union Pacific Oompany and the Kansas Pacific Company were in ptOi CSS of preparation at that tinief — A. I do not. That business done solely by Jndge Dillon. Q. Vou were not consulted ; when did you first learn of tbo of the articles of consolidation, when tbey were signed T — A. After tbe were signed. Q. What was tbe dale of tbe articles of consolidation} — A. Tbe24t day of Jannary, 1880. Q. That is, tbo next day after that decree f — A. Yen, sir ii. Do you know, personally, the snbseqaent history of tbo 2&M shares of Denvor stock that wore released under that decree! — A. know what liecamo of thom, and what disposition was inado of tbei from an examination of the books of tho company. Q. Into whoHO bauds did tbey pass from the Kansas PaciiloOoi pauyT — A, Tbey were delivered by the Kansas I'aeilio OouipMiy payment for tho bonds and stock of a number of what nro liov ti brancli road^ nf (he Union Paciftc RaWwsx^' to\ft\i'AWj . ARTEMAS H. HOLMES. 153 (J They wero the branch roads of the Kausas Pacific t — A. They were the branch roads of the Kansas Pacific Compauy. Q. The same roads that you have referred to iu the early part of your examiuationt — A. In part, and in part the roads which were mentioned by Mr. Adams in his examination. In other words, beginning in 1879, in the fall of that year, immediately after Mr. Gould returned from an absence in Europe, the plans of the company were changed into a large aod widely extended scheme, of uniting the general system of the Union Pacific with its branch lines, or roads which were intended to be branch lines, for the purpose of adding and insuring to the lines of the system tke feeding roads — the branch lines themselves. WHEBE THE DENVER PACIFIC STOCK WENT. Q, To whom were those 29,000 shares transferred by the Union Pacific Company t — A. They were transferred to Mr. Gould and his associates, who bad acquired^ in pursuance of that plan, the ownership of these branch roads in advance. Q, Who were the parties, in addition to Mr. Gould ; I merely want the names t — ^A. Mr. Frederick L. Ames and Mr. Sidney Dillon ; I think kr. Sage and other associates in the Union Pacific. I think all of them, perhaps, with the exception of three or four, but all the active Union Pacific managing party. Mr. Dexter was one and Mr. Atkins was aDottier. Q. Under the consolidation agreement, for what was this Denver stock: exchanged t — A. The stock of the new corporation, the Union Pacific Kailway Company. Q. And that stock at that time had a market value of what, imme- diately after the exchange ? — A. Somewhat above par. By the Chairman : Q. What is the par T — A. One hundred dollars. Q. AVbat is the par of the Kansas Pacific? — A. Fifty dollars a share; hot always treated as two shares constituting one. RATE OF EXCHANGE FOR UNITED STATES STOCK. By Commissioner Anderson : Q. ICansas Pacific was exchanged, dollar for dollar, for the Union Pacific!— A. Yes, sir. What was practically done was the perform- ance of the offer of the Kansas Pacific in its complaint (which the coort did not refer to), not only in the alternative, but we did both. The bonds were canceled, as provided by the decree, and the Kausas Pacific became the owner of the properties which were the proceeds ol the sale of the Denver Pacific stock. By the Chairman : Q. Then this is the stock which I understand you to say, in the case stated, was worth par, and it was said there was reason A. (Interrupting.) No, sir; this stock never was bought or sold any- where, with two exceptions. Q. In the complaint in the suit, he alleges that some of the stock is worth par.— -A. That is Kansas Pacific stock. SUDDEN rise IN MARKET VALUE. Q. That had risen in a short time from $2 or $3 to pax^ — X« ^o^%KC\ these vanoaa brancb lines socarities had been boug\\t o\\ \\\e \yeT«s«» 154 U. S. PACIFIC RAILWAY COMMISSION. credit and with the iudividual money of tbe various ji^entlemeu, and this Denver Pacific stock, whose road was being foreclosed, the stock never having been worth any thing financially, was exchanged into ELansas Pacific stock, and the Kansas Pacific bought those securities, and be- came the owner of the^, and the consolidation mortgage immediately covered those. Q. Why did you say the Denver Pacific was exchanged for Kansas Pacific stock f — A. I did not say it was. I meant to say that the Den- ver Pacific stock was delivered over to the Kansas Pacific Company, freed of a mortgage, as an asset, and that stock was available to be turned into the new consolidated company, and they got par of the con- solidated stock for it. It therefore had the same value which the Kansas Pacific or the Union Pacific had, provided that consolidation was car- ried out. Q. Why should not the exchange have been made with the E^nsas Pacific Company itself, and have the company take the benefit of the exchange, rather than to deliver it to Messrs. Gould, Ames, and Atkins, and have them get the benefit? — A. They did not get the benefit. Q. They got the stock in exchange for the branch roads ? — A. The Kansas Pacific delivered to them the stock for the branch roads. Q. And they had the Dehver Pacific stock! — A. Yes, sir. Q. And that stock had been sworn by Mr. Dillon ou the 17th of Jan- uary as of comparatively no value t — A. Yes, sir ; no financial value. Mr. Anderson. Mr. Holmes will be here to morrow, and I nnder- stand he is engaged at 2 o'clock. We may as well adjourn now. The Chairman. You will be here to morrow at 11 o'oclock, Mr. Holmes t The Witness. Yes, sir. The Chairman. Then we will excuse you until 11 o'clock to-morrow. aetemas h. holmes. The Commission then adjourned to Thursday, May 5, 1887, at 11 a. ui. No. 10 Wall Street, New York, Thursday^ May 5, 1887. The Commission met pursuant to adjournment, all the Commissioners being present. ARTEMAS H. HOLMES, being further examined, testified as fol- lows: The Witness. Will the Commission permit me to volunteer a state- ment t Last year there was an investigation by the judiciary commit- tee of the assembly of this State. It related to the action of Mr. Jus- tice Donohue in the matter of the suit referred to. Upon that occasion Judge Dillon and myself and Mr. Almon Goodwin prepared professional statements, to which we are willing to make oath, but which were not verified at that time, but which were filed with the judiciary commit- tee. I beg leave to present them to the Commission, and they may file them or make such use of them as they may desire. The Chairman. Very well. (Tbe statementa referred to w^cre presented by Mr, Holmes.) ARTEMAS H. HOLMES. 155 THE TESTIMONY BEFORE THE REFEREE. By Commissioner Anderson : Qaestion. Who kept the minutes of the evidence taken before Mr. Rugglest — ^Answer. They were written ont by a stenographer employed lor the occasion. Q. Is that your positive recollection, or were they written out by some one who took them at the time and wrote them out at length t — A. They were taken in short-hand notes by a stenographer, and written oot at length by him. Q. You were present, I assume, while Mr. Dillon testified t — A. Yes, sir. Q. And while Mr. Galef testified t — A. Yes, sir ; and I examined them both. Q. Please look at the writing and state whether you know in whose bandwriting it is. — A. I am unable to say. If I am not mistaken, or rather to speak more properly, my impression is that it is B. Monyhau's, but I am not positive.^ 1 think it is in the handwriting of B. Monyhan, >vlio is at this time the official stenographer of one of the parts of the superior court. Q. Is he in New York now? — A. I saw him here within two weeks. Bartholomew, I think, is his name; "Bat," I believe, he is called. ERASURES IN TESTIMONY. Q. Please look at page 12 of these minutes and state, if you can, by whose hands some of these lines were erased, and the words "at the rate of half a million per annum " were put in, which is in a different bandwriting. — A. I do not know in whose handwriting it is, unless it is in that of the same person who wrote the other, the body of it. Q. Please look for yourself and compare writings, and state whether you think it is in the same handwriting. — A. I cannot say. Q. Are the erased words in the same handwriting as the body of the testimony t — A. I think they might have been, or that they might be \7rltten by the same person. Q. Do you know whether the words " at the rate of half a million per annum" are in the handwriting of the witness, Mr. Galef t — A. I think they are not. Mr. Oalef is here and probably will remember the circum- stances. Q. Did you mean in the room ? — A. No, sir ; in the city. Commissioner Anderson. I desire to put on the record of this Com- mission this evidence, as it stood and as it is altered. I will read this part of the evidence. The witness is Mr. A. H. Calef : THE RECORD AS TAKEN AND AS ALTERED. By Mr. Holmes : Q. Do yoQ know whether or Dot the earnings and receipta of the Kansas Pacific Company daring tho past year have been in excess of its fixed interest charge, oper- ating expenses, and payments for taxes, replacements, renewals, and repairs during that period of time f — A. During tho last eleven months very little. The wonls "very little" are scratched out, and the words "at the rate of half a million per annum" are added, so as to fill out the line. I call tho attention of the Commission to it, so that the Commissioners may inspect the handwriting. Q. Yay Utile in exceaa. . I'ACIFIC RAILWAY COMMlSSins. Tliiit.iigiiiii, issciatclicdoiit or cniscd by ii lino iKiiiR drawn llirniigli it. A. Very lilllc, if ony. I corilii not Bay. All of wliich is eraseil cscciit tLo word "aaj." Q. But Ihi'j liBVO liflcn in cxcoss during tUo lost elevun moulliHf— A. Yi"", air. Tliat (]iieatiOTi uiid answer are botb erased. Q. Uas .your attention ever been calied to tUiscrasnre before f — A. I ni»y bavu kiiowD it at the time. It look jilace, 1 am sure, at tbe time tlie luinules, baving boon written out by tbu etcuogmptier, were read over by tbc witness in tho presence of tbe referee and eigiied. Q. l3o you say ttiat from a reuolleetiou of tbe occurrenee, or because that is the orderly way T — A. No ; I recollect it as a faet tbat tbe testi- mony was writtea out by tlie stenographer, and tbo testimony was tlien signed by tbo witnesses, with such corrections a« they desired to make, and they wero made. Q. But you are nnable to state in whose handwriting the correction isl— A. 1 am. R. Uo you know whether it is in the handwriting of Mr. UugglcH I— A. I should think not; I think Mr. Ituggles, or Mr. Oalcf, either of them, could tell. wniGH ANSWER IS teue! Q. Do you know tlio earnings of the Kansas Pacific during tbe eleven months referred to sufficiently well to state which is true as a matter of fact, the erased answer or the corrected answer ! — A. I think tho cor- rected answer is true, for the reason that at tho beginning of that period of eleven months the road l>egan to be for the first time operated har- moniously with tbe Union I'acific, and passengers and freight went freely in whatever direction they pleased for the first time. Q. Is that the only basts you have for stating that tho corrected answer is true rather than tbe erased answer! — A. Except the getierai prosperity, which was then almost at its height. Q. My question is whether you make that answer because you cr- amined the accounts and kiiowtho figures, or wiiother it is simple jiidg. ment, and what you think would be the result. — A. I am quite sure tho ebange was made after the examination by Mr. (."alef of the figures. Q. My question is whether your answer that you now make, that in your judgment tbe earnings were about half a million ))er annum over and aljove the operating expenses and the payments referred to in tbo question, is tho result of tbe examination by you personally of the ao- counts for these eleven months, or whether it is based on your lielief iu the prosperity of tho road. — A. It is not the latter, and I am not Huro that I made any such examination as to warrant my answering yoar first proposition ; yea, sir. Q. You never have made such an examination I — A. Yes, sir; fre- quently. Q. Do you know those ucconnta now for tbat eleven months T — A. I cannot recall them; but it was my business to hare made up and to state and to examine iiiul to prove the earnings of the entire road of tbe Kansas Pacific, and also of tho 304 miles, and tbe various sections of it, at alat«!r date than that time. Q. Who has the books which will show the actual earnings as con- :a]ijc«] in your accounts for that eleven months! — A. When I was in- '^tigatiii^ thnt Koli/fct iind niaUiiii;\u'i"'^!\^n"*^^^^\ W\v\A m>\\\* tA \.Vi« ABTEMAS H. HOLMES. 157 books in Omaba and others in Boston, and I sent my witness to both places. He was an officer or employ^ of the road at that time. , Q. When was it that yon made that examination ? — A. I think it was in 1882 and 1883. Q. Who was the person whom you employed to make the examina- tion t — A. George E. Hanson. Q. Where can he be seent — A. I am unable to say; he left the em- ploy of the company two or three years ago, and within a year he came to my office seeking employment, but of his present whereabouts 1 have no knowledge. Q. Did he make a report to you; in writing, 1 meant — A. He was 'sent to me at my request by the company, as being the most informed person. Q. That is not my question. Did he make a report to you of the results of his examination in writing ? — A. He made the reports in writing. Q. Have you those reports t — A. They are on file in the record ol the suit of Morgan against the Union Pacific Railway Company and others in the United States circuit court for this district. Q. Was there a printed copy of that record containing the accounts ? — A. Whether it contains the accounts correctly or not I am unable to say, because after the record was printed, before anything was done, the cases were withdrawn, and I never examined them accurately for the purpose of comparison between the original and these purported copies. Q. Are you prepared to state positively, from your present informa- tion, that this answer ^'at the rate of half a million per annum" refer- ring to the excess of earnings over the fixed charges, operating ex- penses, and payments for taxes, replacements, renewals, and repairs, as applied to the Kansas Pacific for the eleven months prior to January, 1880, is a correct answer or nott — A. I am unable to say. Q. Do 3'ou know who drew the original articles of consolidation t — A. Judge Dillon. Q. Do you know when he drew them ! — A. No, sir. Q. Do you know whether they were actually prepared before the 24th of January, 1880 1 — A. I think they must have been; I do not know. Q. Where are the minutes of the meetings of the board of directors of the Kansas Pacific? — A. I believe them to be in Boston. Q. Where are the minutes of the meetings of the Union Pacific t — A. X^iudon me; I think they are a part of the earliest meetings before XS65, which are missing. Q. Of the Kansas Pacific! — A. I think so; I am not positive about trliat The Chairman. All of the minutes of the Kansas Pacific are miss- ing prior to 1865 1 The Witness. I said some of them. There were, as I said yestcr- (\i\\^ qx^::; '9of twp Of tk^r^ momfii^. - N. PACIFIC RAILWAY COMMISSION. Q. Were you a menibcr in JaDuary, 1S801 — A. I ttiink 1 Q. Were you itreitent at iHty of the ineetiiigBof tlie Itoar^l! — A. Ian iiuutjle torecull it. Q. I mean wbeu you were a director? — A. I tliink tlioro were no twanl luecUugs belli, if I recollect it; that is, the boani uioi-liiiR (Imt waHlieklJf I recollect, where tbe chaoge of directors look jibieo rliially van liekl in Saint LouIk. li. That ivas in 1878 !— A. I do not recollect. Q, After the S»int Louia party was bonght oatt — A. Yos, Hir; bat I am tiot sure that it was in 1K78; it may have been in tliu Uttur ]Mirt of 1878. Q. The cvi(ku(!o jy von yesterday located it in Maj', 1878; wcru Iberv any meetings of the board of thu Kansas Pacific bold in Janmiry, 1880 1 — A. 1 Hin nnable to say. i}. You any you were a director jit that timol— A. For only a very short period ; and I do not recollect of board moetinna b.'ing held at which I attended in that period. Q. Yon were then counsel to the Kansas Pacific t — A. Xotif that wai earlier than Q. In this auitl— A. My connection with the Kansas Paoifio as iti coiniBel began in Jnnc, 1870. Q. This suit was brought in January, 1880.— A. I was then counsel for the Kansas PaciBc. THE KKSULT OV THE DECUKE. Q. The result of this decree was to vest the title of the Deiiverstock in Ihe Kansas PaciflcT — A. Yes, sir. Q. As counsel for the Kansas Pacitlc.botv could that stock bo divcBtoil without a meeting of the bouitl of directors! — A. 1 was not then member of the board, Q. You were counsel for the company t— A. Yes, sir. tj. You hiul procured this decree by which the title becaino vested la thecompiinyf — A, Yes, sir. Q. And you became aware within a very short time that that tliirty thousand shares of stock had passed out of the Kansas Pacific into tbs; hands of what yon referred to as the Union Paeilicparty t— A. I tearneil that Ihen or immediately thereafler; I was not asked at Ibat time to utu-nd any meeting of the board, nud my recollection i > that I did not; 1 do not know whether or not a board meeting was thenhvld. Q. Wore you not curious, as counsel of the company, to ascertain by wliat authority the Kansas Pacific bad parted with itstitlcT— A, I may bavo bad some curiosity on the subject. Q. Was jour curiosity gratilled at thattimol — A. 1 lliiuk not immu diately at that time. Q. As far as you know, there was no meelingof the boanl held t— A. As far as I know there was a meeting. Q. There was a meeting of the Kansas Pacific dircctora ! — A, I so far as 1 know, because I know nothing at)out it one way or tlie other. Q. You do not know of any meeting bcin^; held or any action thai you know of being taken in the month of .laauary, 18^0 1 — A. 1 i]( not. Q. In what manner were you infumied that the title to that BtocI ywKsed out of the hands of the Katisas Pacific inl" the bands of sorot oat- eJne f — A. JJ,V making imiviirws, w^iX by (.■■s.vwuwwiVVtVy.wiV.* of U^ ARTEMAS H. HOLMES. 159 Kansas Pacific Company, some time afterwards, when the trausactiou was the sabject of newspaper comment, and the subject of a litigation fhidi was instituted — 1 have forgotten how soon afterwards— by per- sons who were the holders oi the consolidated mortgage bonds. * BOSESBAUM VS. KAT^SAS PACIFIC AND THE TRUSTEES. Q. What suit do you now refer to ? — A. I think the title of the suit wasBosenbaum against the Kansas Pacific, and Messrs. Sage and Goold, as trustees. Q. Who was Mr. Kosenbaum's counsel!— A. Mr. Edward L. An* drews. Q. How far was this suit carried t — A. It was carried until the bonds upon which Eosenbaum and others were suing, the income bonds, were porohased from them ; the suit which I refer to having been brought as a mere club to compel a settlement of the suit upon the income hoods, and they discontinued their suit when their income bonds i^ere disposed of by them. Q. And bought by whom?— A. 1 think -Mr. Sidney Dillon; at all events, Mr. Dillon conducted the negotiations with Mr. Andrews, for I was present on two or three occasions. Q. Was that action tried t — A. No, sir. Q. Was any evidence taken? — A. No, sir. Q. Was it brought to issue? — A. No, sir; I am quite sure it was not Q. Was a complaint served t — A. There was. Q. Have you a copy of that complaint in your office ? — A. Yes, sir. THE TRANSFER OF DENVER STOCK OUT OF THE KANSAS PACIFIC. Q. You say that you found out, by examining the books of transfer, that the stock had been passed out of the Kansas Pacific shortly after your decree in the Kansas Pacific suit ! — A. Not by examination of the transfer books, but by examination of the accounts of the Kansas Pa- cific Company. Q. Did you examine the transfer books ? — A. I did not. Q. Did the book which you did examine give you any information as to the authority for making the transfer, and how it was derived ? — A. Xo, sir. Q. Who directed the making of the transfer ! — A. I do not know ; it mnst have been by the company itself, as a corporation. Q. Why do you say it must have been by the company itself? -A. Because the stock belonged to the corporation. Q. Do you say that because you have any knowledge on the subject, or because you simply think that would be the proper way to do it? — A. That is the only way to do it. Q. If the president of the company told the transfer clerk to make the necessary entries and ho did so, and delivered the stock, though that would be illegal, would it not effect the result, in fact!— A. Yes, sir. Q. Do you not know that that is the way it was done ! — A. No, sir; I do not Q. Have you not been so told? — A. 1 think my inquiries did not re- late to the actual transfer of the Denver Pacific stock to the Kansas Pacific, and from that company to other persons. It related to the in- quiij : What were the proceeds of that stock to t\^e com\j«tW5 \ ii^ . S. PACIFIC RAILWAY COMMISBION. wliat traiisacUon it wjis parted witli by the KaiisaH Pftcflic Ouitijiany to other personsT Q. Then you toatlo no inquiry wliatevur aa to tbo Hoiireu of autbority fur efl'ectiug the transfer out of the Kausaa Pacific Ooinpany to Mr, Gould, and Mr. Ames, and Mr. Dillon, and Mr. Haea T— ^A. Tbat was llio business of my senior counsel, Judge Dillon, and I did not int«P fere uitli it, nor did 1 make any inquiry in regard to it. Q. Did you know tbat ho was engaged in making such inquiries T — A. I did not. Q. Did you have any conversation with him on that subject T — A. Not at tbat time. Q, Have you flinraf — A. Yes, sir. (j. Has he told you what in bis judgment tbe authority was for mak- ing the transfer T — A. No, sir; I do not now speak of the transfer of atock. 1 mean of tbe transaction — that Jndgu Dillon and Mr. A^ J. I'oppteton were both seuior counsel to myself, and also Sydney Bartlett, esq., was my senior, and I did not interfere, except wben called upon to fM.wrvi. ABIEMAS H. HOLMES. 161 6oaglit to obtain them, and I got a copy from my adversary, who was a representative of the Fremont party. lu examining my papers I fonnd it I can leave it with the Commission if they wish it. It was from 1857 to 1863. By Gommissiouer Littler : Q. Will yoa leave it here for oar examination? — A. Yes, sir 5 if there is any fair hope of getting it ba£k. Commissioner Anderson. We are all lawyers. Mr. John F. Dillon. Does that mean it is dangerous f Commissioner Anderson. Yes, sir. The Witness. I suppose a replevin would lie against a law3'er. Commissioner Anderson. There is an article in the consolidated mortgagiB that fixes the rate of exchange for these different securities. Perhaps you can call my attention to the page number better than I can find it. The Witness. There is one exception to the rate of exchange, which will be found on the foot of page 166 and top of page 167. They re- lated to the securities in the hands of Dillou, Sage, and Viliard. It hegiuB with article 22 at page 1G8 of the Book of ludentures. ARTICLE 22 OF CONSOLIDATED MORTGAGE. Q. Article 22 appears to direct, after taking out $24,000,000 of the $30,000,000 of issue and considering them as applicable to the exchanges provided for in article 23, that any surplus that may remain out of the said $24,000,000 after the conversion under article 23, and the six mil- lions also which remained above the $24,000,000, should be applied to the purposes of providing funds for the construction of extensions and branches of the Kansas Pacific Railway at the rate and in the manner and nnder the restrictions in Che next article but two, hereinafter spec- ified. Now the $24,000,000 are controlled, as I understand it, by article 3S. and that directs certain rates of exchange for all the miscellaneous securities which j^ou have explained to us had grown up in the years prior to this mortgage. Will you please describe to us how these rates of exchange came to be agreed upon! — A. I think they were arbitrary, havinr^ regard to the relative values at that time. • WHO. FIXED THE RATES? Q. Who directed the draftsman of this mortgage to fix these partic- nlar rates; as, for instance, for the Eastern and Middle Division and Denver Extension, and the funded interest certificates issued for ar- rears of interest on said mortgages at par ? Who determined that par should be paid for them? — A. Those rates were the result of a sym- posium of the various conflicting interests. That is, the committee of nine of the Kansas Pacific bondholders with the holders of the junior securities, and with the holders of the land-grant bonds, they together Arranged and agreeersons so failing shall ipso facto suffer a reduction of ten per cent, of their then respective interests, such reduction to be apportioned ratably among such interests as shall comply herewith, and supply the requisite securites. Ei^kih. That all profits which shall at any time accrue to the pool, from whatever •bnree arising, shall be apportioned and distributed among the parties hereto at and ^rthe proportion of their respective interests in said pool at the time such profits ihidlaccroe, subject to the terms of this agreement. IToitk, That the iiurpose of this agreement and pool, is : (1) To unite in interest the Kansas Pacific Railway and Union Pacific Railway Com- panies, so that the two roads shall bo operated as a continuous line and in all respects ai contemplated by the several acts of Congress in relation thereto, and in order that the interests of the public and the Government may be better subserved. (2) To provide for the payment or other satisfaction of the Denver extension bond- holdere. (3) To provide and secure the payment of the bonds secured by the first mortgages upon the main line, according to the terms of said mortgages, and aUo for the pay- ment of the bonds upon the branch road, so far as practicable, having due consider- ition for the value tuereof. (4) And tho more effectually to accomplish these ends and to secure the parties, MiMicrlbers and contributors hereto, their residuary rights in the property of the Kan- tts Pacific Railway Company to reorganize said company upon a substantial basis. (5) And upon such reorganization to apportion the stook created thereon among tiie parties hereto, according to our respective interests in said pool at tho time thereof. Tenth, It is further agreed that if upon the first day of June, 1878, it is found, parsnant to paragraph tmrd, that Messrs. Gould, Dillon, and Ames have not a major- ity interest in said pool, that they shall have an option on such an amount of the other interests, ratably and for cash on the basis of tho schedule as shall give to said Gonid, Dillon, and Ames a mtgority interest. EUffnth, That the executive committee, in furtherance of the ninth paragraph liereof, shall provide and secure that the stock to be created as herein contemplated, liudl be ten million dollars, and that there shall be paid thereon for the first and sec- ond years after said reorganization semi-annual dividends, at the rate of six percent, per annum ; for the third and fourth years thereafter, at the rato of seven per centb peranniim, and for the fifth and subsequent years thereafter, at the rate of at least eight per cent, per annniu : JProridedj however, That if it shall Ve deem^\)«ft\i\i^ «iiul n. H. TACIFIC RAILWAY COMMISSION. ^^^^H v< I'l till) ilividenilH to \>t: |iaUl on Mid utock for thr fir«t and Hei " laUleilfor thu|>iirposi>of retiriiit{»r»thi-rvrliicivllcvlug tbflMi iiMit to puTitftMnb wivunth boreof. «d io lrii>licnte at tht city of Ni'W Vork tbU 'J4th an; of A e. S. Grkklrv. JOHW U. I'KltUY. J. 1'. I'SIIBtl. Al>OLPIlfll UKlKlt. H. W, l.BWis, Jk. D. M. KwoKiiTOx, B. M. EliKLL. ttlDKKYUlt.I-Oh'. Jay GofLD. lln.iiiT ViLtAKU. AlCTKMl.'Mll. liui.uEi ItOIIKlIT R. C'AKIt. p. W. Mristkii, ASTEliAa H. HOLUES. S§iSg|S|S Jl m iiii ill milts ijlllli iiiSi msiii iiiiiii mtm Jflll -I»i »»»o»it-lY h) [i*(]iin)«uji ?:» Iljil !?:§l I i -•pnoq lOJnipadoms . ; ■*pn(H) Jnipnnj liiil 8S«S 166 U. S. PACIFIC RAILWAY COMMISSION. Exhibit C. Thk Uxiox Pacific Railiioad C'ompaxy, President's Office, New York, April 26, 1878. Tho executive committee of the Kansas I'aciiic pool are hereby directed to open negotiations with the representatives of the Denver Extension bondholdere for the purpose of carryiDfi; out the objects of the pool agreement this day signed. JAY GOlJiA). JOHN D. PERRY. C. S. GREELEY. SIDNEY DILLON. B. W. LEWIS, Jr. ARTEMAS H. HOLMES. Exhibit D. Memorandum of agreement made this 23d day of May, 1878. We, Sidney Dillon, Frederick L. Ames, Jay Gould, C. S. Greeley^ J. D. Peny/B. £. Carr, Adolphus Meier, B. W. Lewis, Jr., Henry Villard, John P. Usher, D. M. £d- gerton, and A. H. Holmes, hereby covenant and agree that article first of that oertar memorandum of agreement made and executed by us in triplicate at the city of Ne York the 24th day of April, 1878, bo amended by substituting the name of Sidnej Dillon instead of tho name of Frederick L. Ames as one of the executive committee, as by said article constituted ; and wo do further consent and agree that said Sidne^ Dillon be vested with the duties and powers as one 6f the executive committee pur suant to said memorandum of agreement ; and we do further consent and agree tha' this instrument be annexed to and made a part of said memorandum of ajmement. Made and executed in triplicate at the city of Now York this 23d day of May, 187 C. S. GuEELEY. Sidney Dillok. Jonx D. Pehky. Jay Gould. J. P. UsHEii. Hexrt Villa bd. ADoi.piirs Mkirk. Artkmab H. Holmes. B. W. Lewis, Jr. RonKRT K. Cabr. D. M. Edgerton. F. W. Meisteb. S. M. Edgrll. Exhibit E. The executive committee of the pool are hereby directed to prepare, publish, a: carry into effect a programme to bring iu junior security holders not parties to t :. pool. New York, Mav 30, 1S78. JAY GOULD. JOHN D. PERRY. C. S. GREELEY. HENRY VILLARD. SIDNEY DILLON. J. P. USHER. , ARTEMAS H. HOLMES- ^^ ^' Commissioner Anderson. \Ve wiH say instead of the Union Pacift: E-^J^c pool, the parties named in Exhibit 1, of May 5, 1887. Tho Witness. The securities mentioned in Exhibit 1, of May 5, 188^^-^' were the foundation — the beginning. They were afterwards increase^^ *^' I think, as to all the classes mentioned, very largely from time to tinr^^^^™^' and the i)ai)er marked Exhibit 1, last spoken of, was only the inceptioc::^^"? and not the condition as it ultimately existed. That is, the secnritfc'^:^"'^^ mentioned in the paper are very much less in the aggregate, if my rec^^^^J^'* lection serves me, than the securities named at tho foot of page 156^^^^' the hook r>^ind^ntures. AHTEMAS H. HOLMES. 167 RITE OF TBANSFER OF SECURITIES IN CONSOLIDATION. Q. The rate of transfer as to the special secarities at page 156 is that thebplders of the securities are to receive $3,400,000 iu amouut of the said coDsolidated first-mortgage bonds. Are you able to state whether that sum in those bonds is greater or less than they would have received liad they converted under article 23 ! — A. I am unable to say. I never made the computation. It would be a variable sum, as the rates of gome of the securities mentioned would be estimated at. Commissioner Andekson. It would be perhaps a little difficult to ascertain, because some of the securities mentioned at the foot of page 156 are not convertible at all under article 23. The Witness. That is true. Pardon me, that is not altogether true, because some of the branch line bonds, such as the Arkansas Valley, which were not convertible under any of the sections you have read, nevertheless, being a branch of the road of the Kansas Pacific, ana beiog within the definition mentioned at another part of the mortgage, were transferable. SATE FOR AEKANSA.S VALLEY RAILWAY BONDS. Q. Please refer us to that other part, so that we can ascertain their exact value under section 23. — A. I mean securities which were ex- changeable for bonds of the consolidated mortgage, which came within the definition and limitation meufioned in article 24. For example, Arkansas Valley Railway Company bonds, which were a part of the se- carities mentioned at page 156, which were exchangeable for $3,400,000 consolidated bonds. Article 24 fitted the Arkansas Valley bonds, be- caase article 24 provides that the consolidated bonds might be issued in exchange, upon certain requisitions, for any bonds payable, the principal and interest of which are guaranteed or assumed by said com- pany. That had been done as to the Arkansas Valley Company by the Kansas Pacific Company, or issued by any other company, the road of which is leased by said company. That applied to the Denver Pacific. Q. Then article 23, which fixes the rate, provides the rate to which those bouds, after having received that guarantee, would have been en- titled!—A. Article 23 is silent on that subject, if I recollect it rightly. Q. You say that by operating under article 24, we can put the se- carities which you have referred to, the Arkansas Valley, in such a con- dition as to ascertain what they would have been entitled to get under article 23? — A. No; under article 24. Q. What figure would they be entitled to get under article 24 if a holder of those bonds had presented himself and asked for consolidated hondsf— A. The amounts of the first-mortgage bonds are issuable un- der article 24, after the rate of $15,000 per mile east of the meridian of Denver, or $25,000 per mile west thereof. Q. Do you know how much per mile was upou the Arkansas Val- ley f—A. I cannot now state. Q. Does that apply to the east or west side of the meridian referred to f—A. It applies to the east side — that is, east of Denver. Q. Then your point is, that if the rate was not over $15,000 per mile that you could get par for those bonds iu consolidated bonds ! — A. That is, the $454,000 of Arkansas Valley bonds were exchangeable for new bonds at the rate of $15,000 per mile of the Arkansas Valley for the consolidates! bouds at par. 168 U. S. PACIFIC RAILWAY COMMISSION. ARTICLE 24 REFERS TO RRANCH LINES. Q. Does tbat article 24 apply to the branch lines as well as to the main lines f I mean that portion of the provision which relates to the bonds at $15,000 and $25,000per mile. — A. It applies solely to branch lines, the diflerence being that west of ])euver you were in the Bocky Mountains, and east of Denver you were in the prairie. Q. You have said that the holdings under Exhibit 1, of May 5, in- creased from the period when this paper was made up to the time of the consolidation. You were yourself a member of that arrangement, I believe t — A. Yes, sir. Q. Did you keep track of the increase t — A. I did up to a certain pe- riod ; but when seven-tenths of the interest was accumulated in one or two hands, the interest of the other persons being perfectly protected to the extent to which they had joined, the seven-tenths could and did con- trol it as they chose by the constitution provided in the paper itself. Q. Which class of securities increase the most f I mean whether thog^» j( pool owned more Kansas Pacific stock, or some of those bonds, or^^Di what ? — A. I am unable to say. AMOUNT OF KANSAS PACIFIC STOCK HELD BY POOL. Q. About the Kansas Pacific stock. I think you stated that wheoK ^^n the paper wa« originally made the .pool held a very large qnautity stock. About what amount did you say t — A. I do not think I states it, but it is shown on that paper. You will observe that the origios scheme there was on the theory that there would probably be a reoi ganization and new stock issued, and that the old stock was goiuff receive new stock at the rate stated. That was never contummated. Q. Do you know how much stock this pool held, or what there in this pool at about the time of the consolidation ! — A. I do not. Q. Did it not api>roximate three-fourths of the whole issue! — A. I cannot state. I have no knowledge at all on the subject. Q. Do you know who held the largest quantity of Kansas Paci^^fcific stock at that time I — A. 1 have always understood that Mr. Gould wj^ "as the largest ind' vidual owner. I do not know definitely. Q. Were you not directly interested as a partner in this pool ! — a- A. Yes, sir. Q. Did you over receive an account of the liquidation of the pool! — A. I knew all about it at the time. My recollection is — I am notsur^K: re, but I have a strong impression — that the stock was taken out of tKT-^^he pool. That is, it was separated from the rest of the securities. Q. That could not have been done without your knowledge, cou it I In the paper assigned the stock is a part of the pool! — ^A. signed, of course not ; but my strong recollection is, that at one til the persons were permitted to withdraw the amount of the contril tions of stock. Q. It must have been on some terms as to the price. The si fluctuated very rapidly" in the market, did it not ? — A. It made no st to affect tbeir transactions that might iiiitiirally arise from the ownership of such stock f — A. Yes. sir. ■ WHO KKPT THE POOL ACCOUNTS, Q, Who kept the pool accounts f^A. t originally made up tbe papera and documents. I think they finully drifted into the hands of Mr. A. H.Calef. Q. I mean by the accounts, the iiccnnnta showing profit and loss ; the realizations and dividends, if any. — A. I am unable to state. Q. You received some dividends from this transaction, did yon not I — A. I think [ did ; I am sure I did. Q. Who informed you that some statement bad been prepared sliow- JDg what amount you were to receive T — A. I could not say who informed nie. As I stated, the management of it varied and changed. At one time one of the three gentlemen bad the key to the box itself, and I po-ssesKcd a key of the Safe Deposit Company in which the boxes were. I am uot referring to the securities ; I am referring U> the flgares showing the amount of profits realized out of the pool. — A. I cannot tell you that. Q. Were you not dosirons of seeing and checking oS' the amounts that yon were to receive T — A. It is simply a failure of memory on tay part. My interest became very small. I knew at I be time; but I iiar«- forgotten now tbrongb whom the information was conveyed to me. Q. Do you know what was the whole profit made by all the members of tliepool, collectively t -A. 1 do not know. Q. Do yon think it was as much as *J«,(H>0,00Ol— A. Ob, I think not. Q. It was a very large sum, was it not, after the trivusactiouii had al7 been closed T — A. Well, 1 cannot say tliat. I think it wns no such snm as Iliat. By the Cuairman: Q. What did the puol pay for tlits stock, or what was I he value of ttie Kansas Pacific and Denver Pacific coming into the i>ool when Ihey ^t control T— A. The Denver Pacific never ciime into the pmd tu any way, nor any of its securities. Q. There were ten millions of dollars at pur of isharea ul' xtoek of the Kansas Pacific, and four millions of dollars at pur of slian-s of Denver , ARTEMAS H. HOLHES. 171 Ptfdfic united together^ forming fourteen millions of stock. Who got possession of itf — ^A. I think I did not. Q. Who did f — A. I stated my recollection was that the stock of the Kansas Pacific was taken oat of the pool, and the securities finally drifted into the control of a few people who owned the whole of the bonds represented in that combination. Q. When they got control, what did the $14,000,000 of shares of stock cost themf — A. ^ey did not have 14,000,000 of shares of stock. HARMONIOUS ADJUSTMENT OF VALUES. Q. How many did they have ? — ^A. I think all the shares were with- drawn firom the pool and passed back to the original contributors thereof. You see, the pool was a very varying quantity. Some gentlemen may have purchased their securities on one day at one price, and some may liAFe held them for years, and some may have bought them later, and each person's holdings aggregated a different sum or value, because ^ur- ciased at different times. When the arrangement wait originally schemed or contrived, everybody thought differently as to everybody else's se- <^n'ties as to their value ; and we hit upon this simply as a harmonious ^dJQstment as to the values of these several securities. Q. ^hat was the harmonious adjustment of the value f — A. Origi- ^SLlIy-y as stated there in the schedule. Commissioner Anderson. It is in the mortgage. Tbe Witness. Oh, no ; the pool and mortgage are different as day and xmight. Commissioner Andebson. But the rates t Tbc Witness. That is an entirely different question from the ques- tion of Governor Pattison, which was, "What were the rates from the incejition 1" That is stated there. (i« Win you explain to me this table f Stock accepted, for instance, at $9,BO0, estimated value $1,200,000. What is the difference between tbo^c figures, in their relation to this agreement or contract, as to Talnct — ^A. The stock was estimated at 12J per cent, of its par value. By Commissioner Anderson : Q. That is the Kansas Pacific stock ! — A. Yes, sir. By the Chairman : C^, Can you recollect any estimate at that time as to the Denver Pa- cifto stock! — ^A. It was not in the pool, and it was not in condition whi^re it could ever be estimated. There were not ten holders in all of th^ Denver stock. Q. Did it have any value? — A. Solely for the purpose of controlling tho connection between Denver and Cheyenne. There were three mill- ions, in round numbers, owned by the Kansas Pacific Company; but wit,h the exception of what was necessary to qualify certain ])er80U8 to act as directors, I think the balance of it was held by Amsterdam peo- ple, or by the commissioners of Arapahoe County, Colorado, who had acquired it or owned it in connection with the Denver Pacific bonds, wliich they had purchased. But the Denver Pacific stock is a stranger to that. Commissioner Anderson. Somebody has kept the account, I pre- Bune. The Witness. I stated that I think Mr. Calef finally kept the p- ofit. ' V. S, PACIFIC RAILWAY COMMIS''ION. XCHANGE OP KANSAS PACIFIC I'OU fXIOS I'ACIFIC STOCK. By Coinmissiouer Anderson : All t4ic Kansiis PaciDc Htoi:k which wa8 Lelil by any of the imrtieH, iiiig, of coiirae, Mr. Croiilil, as deriviug utack htim this pool, and anyone t^Ise, under the cousolidatioi), it-ceived a tiliaro of the Uoioa Pocillu Uailway for two shared of Kanuns Paoific stock T — A. Yes, sir; tbo Kansas I'lunHo utoclc being S50 a share. But that was not hecaose of any ooiiiieetioii with the pool in anywise. Q, I ilo not Kay thr' tnstiiucu, in the open markel, of Ickh value than those figures, but not inueh; nud the litigation, tlie main liligalion of the fore- closure, had got into such a eondition, while the properly of the com- pany was increasing in value and the future looked more prosperous, that these various hostile interests were got together, each interest as I have mentioned, being sometimes (and I think in every case) lor » different class of secnrities, so that they were interested in several diffiir- ent kinds. They Dually arranged these arbitrary figures. Q. What were the figures intended to represent; the value to the holder of those securities of the class of secnrities referred tof — A. No, air ; they were to represent the proportionate interests in the reorgaai- zation of the ICansas Pa<;tflc roail, which was then oonteuiplated ; the purpose being, through this arrangament, to get together and combinei a Hufflcient amount, as many ax conhl be got, of the various conflicting interests, withdraw the opposition, have a foreclosure suit, and repre-' sent their ownership in the rescdta of tlie forecloanre suit, tin' equity «f redemption, in the proimrtions mentioned in that paper. STOCK BATKP AT 12J. Q. 1 want to kuow whother these rates have anything lo do wilii l\i6 supposed value of the properties referred to f — A. Yes, sir. Q, They do have something to do with the su|iposed value 1 — A. That! is, they were fixed by a sort of arbitration among tlu> parlies, an to tlii TiU»tivo value. My recollection is, we ^gan with the sttjclc and *t' ' "That is the poorest security here. What will we treat that worth T" J ▲RTEMAS H. HOLMES. 173 Q. What was it sold for in the market f — A. I think in all cases they were about or a little below the iigares mentioned there. Q. Then the 12} i>er cent, opposite the stock indicates that its market value was then about 12? — A. Yes, sir. Its quotation price was then on $30 shares, or a little less, and the^e figures were made at a little more, so that people would say, " I can get more than the market price, and I will put those in and share with the rest." The figures were made as an inducement to the various holders to persuade them to come in. THE FLOATING DEBT AT PAR. Q. Tiie floating debt is put at par. That had no market price, had it!— A. The floating debt was represented in reality by the funding mortgage bondholders who held the whip hand, and to a very large ex- tent was Saint Louis money. These people insisted upon being paid. For instance, the Vulcan Iron Works had sold or delivered rails and other equipment to the Kansas Pacific Company, and they held their proportion of the funding mortgage bonds. The same is true of John D. Perry and Robert E. Carr ; also the Boatman's Savings Institution, of Saint Louis, which had loaned money ; also the estate of Mr. Oliver Ames; Burnham Perry; Williams & Co., who were the furnishers of the supplies. I hav6 here a list which shows at the time the persons who held these bonds against moneys which they had advanced or paid to the company at various times. Q. Your statement is, then, that the floating debt was treated for the porposeof this pool as being secure and worth par I—A.. Yes, sir. UNSUBOBDINATED INCOME BONDS AT 60 PER CENT. Q. The 50 per cent, for the unsubordinated income bonds. Was that the market valuet— A. If you will pardon me a moment. There vas another reason there. That is, the floating debt and funding mort- gage bouds were all held by the Saint Louis people, who were making the principal contest in the foreclosure suit. Q. As to the 50 per cent, for the unsubordinated income bonds ; what was their market value at the time of the pool arrangement ? — A. I think they must have been less than that. Q. But in that neighborhood ? — A. Yes, sir. Q. And in the same way the 30 per cent, for the subordinated income bonds!— A. Tea, sir; those had been selling at 15, 16, 18, and 20; but at that time they were somewhat below that figure — 30. SECOND LA^fD GRANT AND ARKANSAS VALLEY AT 50. Q. the second land grant mortgage bonds are put at 50; that was about their market rate! — A. Yes, sir. Q. The Arkansas Valley at 50, the same I — A. Yes, sir; they were held much in the same way, by Saint Louis people. Q. Were they on the New York Stock Exchange list ? — A. No, sir. Q. Was the Leavenworth branch on the stock list ! — A. They had l)eeu dealt in here, but not for many ye^irs, and if they were on the list they were not dealt in. Q. These rates express the then prevailing market value, aH well as * you could get at it at that time ?— A. Yes, sir ; but a little bit higher 0* Had the m.^irkt-t value of these various secur'i\»VQ!a x\^«w mv withia the year previous to the making of this pooU — A.. \ tViVc^^ 74 U. S. PACIFIC RAILWAY COMMISSION.' onsidcrably, and the moineDt the combiuatiou wa^ known as beings for he purpose of takin«j^ the ro^ul out of the receiver's hands and oiierat- ng it in liarniony, they all of them advanced very rapidly. Q. I ain only questioning as to whether they had advanced durinfj^ he year preceding the making of this instrument! — A. Yes, sir. Q. Do 3'ou know whether many of the parties to the instrument had leld their securities for any length of time previous to the making of he pool ! — A. Oh, yes sir ; most of the Saint Louis i>eople had held hem since they originally got them. Q. In examining this Exhibit B, there is first a statement, as I under- tand it, of the securities put into the pool, and then a statement of the listribution of those securities among the different parties, showing heir relative interests I — A. Yes, sir. Q. Can you tell me why the statement in the first column of the stock aggregates $9,600,000, and the distributed statement aggregates only -^ 13,000,000 ? — A. Yes, sir ; because what they were getting was intended Jti 0 be new stock of a new corporation upon a foreclosure at a basis ,^s.b lamed. Q. Do I understand that of the actoial stock of the Kansas Pacific ontributed there was $9,000,000 ? —A. That was the total par of 200,000 hares at $50 a share. Q. That would be $10,000,000 1— A. Nine million six hundred thou- and dollars is almost $10,000,000. Q. Nine million six hundred thousaml dollars was intended to repre- ent all the stock f — A. Yes, sirj I do not know why the $400,000 was oft out. Q. 1 asked before if the first column of Exhibit B indicated thegrosjg — jw unount of securities put into the pool, and I understood you to say it^ ^t lid ? — A. It did at the time of the inception of it. Q. If that answer is correct, that means that $9,600,000 of stock waflgr^-^ )ut into the pool ? — A. No, it does not at all. Q. 1 ask you again if the first column in Exhibit B represents th imonntof securities actually put into the pool f — A. Oh,no ; I misunder- itood you entirely. Q. What does the first column represent f — A. It represents the totaf )f the capital stock issued. Q. Of alt those*, securities named! — A. It represents the total of th unded debt, and a total amount of the unsubordinated incomes, total ot he subordinated, total of the amount of land grants that were out, the^ ^^® otal of the Arkansas Valley, and the total of the Leu ven worth branch ^^-^^* CONCERNING THE POOL ACCOUNT, _ • Q. The pool account, or the amount of securities put into the pool, ie* i ^* o be derived from the distributive statement below the first state ^^^^^' nent ? — A. Yes, sir. The first statement was simply to fix the relative *^^ -^'^ :alues on the basis which we fixed for it, carried out into percentages**^'?*'' ind showing the number of shares of the new stock which was to be is ^^^ 1^ mable therefor. It was then contemplated that they should all b^^^ "^ nerged into new stock. Q. Can you tell me the amount of the different classes of secnritiec>^ vhich were in that pool, their value computed at these agreed rates, ano he value of the same securities with the added securities which cam» nto the ])ool afterwards, at the rates provided for under thecousolidate^- wrtgiige, and at tlie rate provided tot t^Q> ^t«vik under the articles msolidatioDf and then tell me what v?«us \\\^ ^to%^ V^^^^ xMAaVi ^^ ARTEMAS H. HOLMES. 175 poolf— A. No, sir ; that question cannot be answered, because the facts are different from the supposition stated in the question. Q. Can yon tell me what the difference would be between the securi- ties that came into the pool at the rates agreed upon in the pool, and Uiesame securities -figured nnder the consolidated mortgage, and the articles of consolidation t — A. Ko, sir; I have never made the computa- tion. The moaning of that paper to which you refer is intended to be thoroughly explained by, and to be read in connection with, the first paper. The one explains the other ; but the whole plan and scheme was changed, and the intention was never carried out. It only served the pori)ose of uniting in a few hands and in a commou interest what were heretofore scattered, hostile, and very conflicting interests. Q. Is not this true: That Mr. Jay Gould, Mr. Frederick L. Ames, Mr. Sidney Dillon, Mr. Russell Sage, Mr. Dexter, and one or two gentlemen whose names I may have forgotten, through the means of the pool ac- quired large interests in Kansas Pacific stock, in subordiuated income bonds, in unsubordinated income bonds, in second land-grant bonds in Arkansas Valley bonds, and in bonds'of the Lsavenworth branch! — A. Yes, dr. SEOUBITIES EXCHANGED FOR CONSOLIDATED BONDS. Q. For what other secnrities did these gentlemen exchange the se- curities that I have enumerated t — A. With the exception of the stock, all of the other securities were exchanged for consolidated mortgage bonds, agreeably to the provisions of the consolidated mortgage. Q. And at the rates therein specified f — A. Tes, sir. Q. Was that exchange made before the articles of consolidation t — A. Yes, sir; at least six months, and I think nearly eight months be- fore. Q. Do you remember at the time the articles of consolidation were voted for, what amount of consolidated bonds had been issued t — A. Eight million four hundred and thirty thousand dollars. Q. You are satisfied that all the parties I have named of those inter- ested in the pool had come in and converted at that time? — A. Yes, sir. There was one feature of the pool which perhaps you would like to know about. That was, it was compulsory that $500,000 should be ad- vanced by the Union Pacific people to aid in adding, by the purchase of other secnrities, to the strength of the pool. In that way a large amount of secnrities was added. Q. Who had charge of the conversions under the consolidated mort- gage after the articles of consolidation f — A. The mortgage provides as to that, that it is solely between the trustees and the company, upon the company's requisition. Q. The trustees and the holders of securities! — A. That did not fol- low. Q. The holders of securities could not be made to convert, unless they presented their securities for conversion, could they f — A. No; I think the issue of the bonds was solely upon the requisition of the company upon the basis of the conversion. Q. The consolidated mortgage called for au issue of thirty millions of bonds which, by your statement, was reduced to $29,600,000. At the time of the consolidation only $8,400,000 had been converted f — A. Yes, sir. Q. My question is, who had charge of the negotvAtvons VI\t^i\JMi\iQ^flL- ^^//^a9eoII/9tozlcf/Dg'8ecurities after the consoMatiotitooW rfSfcfi.V»\ — 176 U. S. PACIFIC RAILWAY COMMISSION. A. In some iustances the trustees^ in some instances the company. But the trustees were the sole persons who could execute and deliver the bonds. Q. How rai>idly did those outstanding securities come in after the con- solidation ? — A. I am inclined to think that most of them came in be- fore the consolidation. That is, a large proportion. Q. Do you mean to say that all the securities that were entitled to conversion would not call for an issue of more than $8,400,000 of bonds? — A. I think that would be a considerable portion of the actual number of bonds outstanding, even now. Q. Have all the outstanding securities that are enumerated in the consolidated mortgage, and to cover which the consolidated mortgage is made, been retired up to this date f — \, No, sir. Q. Which are outstanding! — A. The report of the Union Pacific states as to most of them what the total issue is, and how much are in the hands of the consolidated mortgage trustees, and how much are still outstanding. Q. What was the total issue of bonds under the consolidated mort- gage to this date ? — A. I am unable to state. Q. Who can give us these figures accurately as to the amount of the outstanding underlying indebtedness, and the amount of the bonds out- standing under the consolidated mortgage, both at the time of the con- solidation and at the present time ! — A. Mr. Ham, Mr. Amos A. Galef, of this cit3% or the comptroller of the Union Pacific. Q. That is, Mr. Mink !— A. Yes, sir. Mr. Ham. There is a table of the bonds ; the whole issue held by th< trustees and the amount afloat. That is on page 35 of the report of 188C. The Witness. Do not ask me, for I could not answer. 1 could onl; refer you to the parties making up those figures. Commissioner Anderson. I have no further questions to ask Mi Holmes. Mr. John F. Dillon. I received a telephonic notice to appear befoi you. Commissioner Anderson. We will examine you. Mr. John F. Dillon. Xow ? Commissioner Anderson. After recess. Mr. John F. Dillon. When the subpoena came it was addressed ti *OIr. Dillon," and I was uncertain whether it meant Mr. Sidney Dillai or myself. Mr. Sidney Dillon. Tho person who served the subpoena called m. the Hon. Judge Dillon. Will you please take one at a time? If yo are going to examine Judge Dillon this afternoon, perhaps you migl take the whole of the time. . I am within two minutes' walk of here, 40 Wall street. If you will take Judge Dillon in hand, I will be relievt for tho present. Commissioner Anderson. I do not think we will keep him more tha^^:^" a half an hour. The Witness (Mr. Holmes). I ask permission to read my te8timon=:::=3j before I sign it. Commissioner Anderson. Certainly. MR. GOULD'S DENVER PACIFIC SOLD AT COST. I]y the Chairman : Q. I want to ask you, Mr. Holmes, o\i(b ot t^o ^\w!iji%l\ft\v%* _I8 th ijtbiog that jou have not said tbat ^ov\ ^awt Vo ^^-^ \ — ^, ARTEMAS'H. HOLVIS. 177 mm The Chairman. That is what we waut to hear, for a few minutes at any rate. It is ten minutes of 1 o'clock now. The Witness, The last question asked me in regard to the $1,000,- OOO of Denver Pacific stock leaves the fact very misleading as shown by the report. Mr. Gould bought that stock at 10 cents on the dollar, as my information serves me — and I made careful examination of it — from the Amsterdam bondholders or the commissioners of Arapahoe County, Colorado ; and he wa« paid the same sum which he paid, namely $10 per share, for that $ 1 ,000,000 of Denver Pacific stock, and it went into the Kansas Pacific Company with the other $3,000,000; and the $4,000,- OOOwasnsed, as I have explained, in the payment for the acquisition of branch lines which had theretofore been made, and Mr. Gould by that op- .erationasto that $1,000,000 made not a penny; whereas, by appear- ances, he would make the difference between the sum of a million dollars and $100,000. By Commissioner Anderson : Q. Ten cents on the dollar!— A. Yes, sir. FINANCIAL ADVANTAaE TO UNION PACIFIC OF CONSOLIDATION. By the Chairman : Q. What was the advantage of the consolidation to the Union Pa- cific Railroad Company t Commissioner Anderson. That is a big field. Q. 1 mean financially ;• not as to agricultural or n.iueral results. What advantage was the consolidation to the Union Pacific ? — A. It addal into the three former companies the great number of branch lines that were purchased with the proceeds of that $4,000,000 of stock, and it consolidated into that new company all of the interests which had theretofore been hostile. It also prevented what was at that time sup- posed to be under advisement, and which has since been thought to iavebeen the fact, that hhd it not been consolidated and had not the Kansas Pacific and its branches and these other branches been brought 'nto one family, the Kansas Pacific would have been used in a hostile manner and another through road built to the Pacific coast in direct 'loetility to the Union Pacific. Instead of that, Mr, Gould developed his plan into what is now the Missouri Pacific, and which apparently is hos- tile to or conflicts with the territory of the Union Pacific proper in only a small degree. ^. Up to the time of the consolidation, if I understand your testi-- f^^ony, the stock of the Kansas Pacific Railroad and the Denver Pacific K«ilway was of little value f — A. That is not true as to the Kansas Pa- cific stock. % What was it worth for some time prior to youT agreement of this rH»ling interest in 1878 ? — A. It was worth comparatively little ; but ^be moment that was understood, the public knew that the com- J^Bed interests, the union of the interests of the territory which covered *^^th Kansas and Nebraska and Colorado and Wyoming and all the ^^rritory to which these united roads were contributing, would be op- ^'^ted together, and that the growth of business and the great earnings ^''tich the Union Pacific Railroad was at that time making would be ''■'ich further advanced and increased by the union of these branch 12 P B t C. 8. PACIFIC RAILWAY COMIIISSIOX. IMCEPTIOK OF TLAN OS CONSOLIDATION. ^,,^. Tbti ajireeuieiit of 187*^ wiisnmde with the viewof ullimately ., Bolidaliii^ with the Uuioii racillc T — A. No ; not esactly, I think t cousolidation never entered into Mr, Oould'^ or iioy ouu else's rair nutil after Mr. Gould had made his trip iihroad, when I had at t timo a comparatively trifliug eonveraation with him, but which i| pressed me very strongly. I asked him what impreNeion hi» exaniii tion of the English system of railroads had given him. and be remarki_ in a very qniet way, that it struck him that the most iiotablo featt was that the whole of the Kiiglish system of railroad was ]>racticai ia two managements; at niost^ three. The scheme was simply to ' away the everlastingly possible uontlicting interests and get themii common control, and make a foreclosure under the Denver extcnsl mortgages, and distribute the equities among the Junior security Uti era. liut the whole drift and plan and theory changed, and nil of thi interests got into the Union Pat-iflc interests as a party. By Commissioner Andekson: Q. That is, when the Baint Louis parties wcru bought out I — A. V< sir; and then they changed the sctiume. They had the power; th owned substaiitiaily all of them. They owned the seven-tenths, a they could, under the scheme and the plan, do .ju»t what they pleasi and everybody knew they could not treat outsiders upou any differ basis than they treated tbemaelves. THE MOTIVE FOB CONSOLIDATION. Q. Limiting my iiuoxtion simply to the Kansas Pacfliu and D«n< Pacific stock, is it not true tbat when Messrs. Uould, Sage, Diil Ames, and Dexter voted iu favor of the consolidatiou they were < holders of large amouuts of Kausas Pacific and Denver Pacific sto which they bad derived partly under the )h>oI, partly by purchase, b partly by the decree iu the suit which has been referred tu, and tl the effect of tbat consolidation was to bring tbem a very mucll lar| amount of money for these securities' than the securities would hi^ realized if the consolidation had not taken placet — A. Tbat is tru«, to stock of the Kansas Pacidc. It is not true as to tbese uuderlyji securities. I do not think it is true of the Denver Pacific stock, i cause that was all held, cither, as the lawful owuer, by tlie Kausaa Pi eiflc (which was as to *;i,000,000).or by Mr. Gould (as to $1,000,000); n mi to the proceeds of the exchange of the entire $4,000,000 for the sto and bonds of the branch roads, 1 do not think that was a source profit to tbem, but rather to the roads theiuselves. I mean to say tt__ iu that transaction of the exchange of the Denver I'lunflc stock, fn my best inforaiatlon, I am unable to learn tbat any of tbem made profll. Q, The question asked you was not whether the owners of tlic Di ver Pacific stock made a profit ns compared with the securities whi they patted with to tho Kansas Pacific, for 1 have not investigal that, but the question was whether, when they voted for a ooDSoIii tion the moneys which they derived from the UiiioD Pacilio stoefc whi was passed to tbem was more than they could have obtained for t Denver Pacific stock if they had undertaken to sell it ou the marl without such consolidation having been made ! — A. The Denver Pad Block oouhl not have been sold on the market for anything, for we coi haro foreclosed the road within tbree \v\o\\\,\i8. ABTEMAS n. UOLMES. 179 KANSAS PACIPIC S TITLE TO DE>'TER PACIFIC STOCK. By Couimissiouer Littler : Q. How ilid the Kansas Pacific IJailwa}' Company obtain title to the stock of the Denver Pacific road? — A, They obtained it throngh the constroction contracts, and the subsequent contract as to the o))eratiou and management of the Denver Pacific Company by the Kansas Pa- cific, the Kansas Pacific as a company having substantially built the Denver Pacific road. Commissioner Anderson. I have not asked you the questions in re- Ijanltothe value of the bonds and securities which were passed to the Kansas Pacific Company in exchange for the Denver Pacific stock, be- cause I thought it would bo better to ask the person who made the transfer. The Witne^'S. Quite right; I am really not a competent witness ou that subject. But the previous question which you asked involved a supposition that those gentlemen owned the Denver Pacific stock as veil as the Kansas Pacific, and that they acquired a large profit from such ownership of the Denver Pacific stock. It was as to that that 1 wished to explain that they did not make such profit. the motive fob CONSOLIDATION. Commissioner Anderson. My only question was whether they did not get more money under the consolidation than they would otherwise have got, so as to gauge the influence that operated upon them at the time they voted for the consolidation. The Witness. Undoubtedly. If the consolidation had not been made the Kansas PaciiSc stock would not have been worth 10 cents ou the dollar, and the Denver Pacific stock would not have been worth waste paper, for the reason that the default on the Denver Pacific mortgage had continued for several years and was very large, and a foreclosure suit was pending, by which the stock could have been wiped out. When I use the word ''consolidation," E use it in the large sense of a unity of interest between the Kansas Pacific and the Union Pacific, and not the actual formal of consolidation. EFFECT OP CONSOLIDATION ON UNION PACIFIC. By the Chairman : Q. Was not the eflect to load the Union Pacific Kailroad with two railroad companies whose stock was of no value ? — A. 1 think not, for 1 think the earning power of the Kansas Pacific has been greater, re- latively, since the consolidation to the new company than the Union Pacific main line has been. Q. Has it not been at the expense of the Union Pacific? — A. I think not; 1 think the Kansas Pacific has more than paid its way all the time since the consolidation. The Denver Pacific was, to some extent, and per- haps it is now, a burden, because it is a parallel road of the Colorado Cen- tral. But you must remember that the only way in which the Kansas Pacific and the Union Pacific could have been consolidated was through the Denver Pacific, because you would have had a gap otherwise. You could not unite, by the charters of the companies, the Kansas Pacific and Union Pacific alone, for the reason that by the acts of CongreM tEe Denver Pacific had been made a part of the Kansas PaciflC| a' should be operated as such. You remember tlic act. 180 U. S. PACIFIC RAILWAY COMMISSION. Q. Yes, sir ; but what eflPect would tbe consolidatiou of the companies have upon the income from the business of two roads such as the Kansas Pacific and Denver f — A. It increased their business very much. Q. Why, and how f — A. Because all business was permitted to flow as it pleased, and the largest proportion of the business of the Kansas Pacific in either direction was derived from its local business and the business brought to it by its branch lines. Do you understand what I mean? The CnAiRMA>\ Yes. The Witness. As it is now, anybody wanting to ship freight, or to go in person, in either direction into this great territory of Kansas and Nebraska and Colorado and Wyoming, can go freely any way they please. Q. IIow had that affected the Union Pacific prior to that time? — A. The Union Pacific's local business at that time was comparatively little. Its principal earnings at that time were from its through business, and the through business was a threateuing quantity. I assume that you can tell from the accounts whether or not the Kansas Pacific and Denver Pacific have not more than paid their way ever since the consolidation ! By Commissioner Anderson : Q. There is another question I want to ask you while I have got this record here. I understood you to say that through such investigation as you have made you are satisfied that the value of the property trans ferred by Mr. Gould and his associates to the Kansas Pacific in ex change for the Denver Pacific stock was as much as they got for it that is, about $.'5,000,000 ? — A. Yes, sir; and I bnse my judgment upoi the subsequent operations of those branch lines. MR. DILLON'S EVIDENCE IN SUIT TO KELEASE STOCK. Q. r>ut that fact is all I \\1int to know at present. Now, that arrange nuMit for tbat transfer iiad been made at the time the articles of coir~am\- solidation were entered into, had it not ? — A. It was undoubtedlv alb -^ matter or subject of agreement, because all of these Union Pacific gei-^' -^^• tlemen were interested themselves in tliat transaction, and had provide* -^e^ the moneys, in part, with which to purchase these branch lines. Q. In Mr. Dillon's examiuation, when you were present, before Me Kuggles, this question was ])ut to hiiu : Q. Tbeiijdo you estimate tbe value of the stock — lieferring to the Denver and Pacific stock — to the Kansas Pacific Coini)any, or the trustees of this mortgage, as based npon control which the ownership of the stock wouhl give to the company, or to the ees? — A. I value it worth something:. Q. Except the outside sum which it would be worth to the Kansas Pacific RaUroi Company for that control, or frted from thep resent mortgages? — ^A. This stock wa tied up in trust, as I said before ; I do not consiose you refer us to him ? — A. Yes, sir. S. PACIFIC RAILWAY COM Ml By tbe CnAIEMAN : Q. if t]ief»cilit,v liixl beeiiafforiledtliL-KniisasPariltciiDd Ihc Uetiver racific, iiiulcr iho act of 187t, flfonld there have, hecii any neressily for a eotisolidntioii t — A. I am incliued to tliiiik nut; bill Ihcre wmM tlien have been a verj' active rivalry and a leiliiclimi of freij-htet from all MJKsoui'iltiver ]ioints, wheivEut by thecoiiMilidatJoii that was eliminated. Q. IJot if the facilities contemidiiled liy the net of 1874 had been | afl'orded this road, they woiihl have bad the advaiita^e of all tbeee ^ fanililies or coiihl have arrjiiired the fuciblJesI — A. Undoubtedly; and tbe Kansds I'acifle wonhl have been of so niucb (,'reul*'r value that the coiiHnlidatii>n in all probability nuiild not have taken phice. APTBRNOON SESSION. Mr. Holmes. If the Conmiissiou please, I should be glad to add one short statement in anawer to the laet question put to me by tbe rbuir- 1 dehire to say that in the litigation as to the judgment roll in wbicli [ hax t> lii'< II examine*], 1 had no uominnnicatiun irirh Mr. JuKlioe Don- iiline, diiei-tly or indJreetly, except in open court in the nsuiil mannut in wliieh tmeh onlei-s and motions are made in similar eiuies. All my i^oiiniiniiieitttoua with him tliron(;hont that litigation took |ilaee in opea eonit. now DENVER PAdlFlCl STOCK WAS OIIIAINKK. By Commissioner Littleie: Q, I began to examiim yon in relation to the manner in wlijc'li tlie Iviintias I'aciflc Itailrond Conipuiiv obtained itOKsessioii of ibo lletirw Vmlhc Railway stock, and yon meoiinted lor ?:i,(HK),0(m of the wlock, as I understood yon, in thin way : 'fhiif lliey nblaineil it in part [tny- meiit for the construction of that rnml ; nm i ii;;ht f — A. Yen, sir. Q. liow did the AmNtordani inniile oMain their i^loek ! — A. 1 think 1 t«taleil ill a part of my exaniiniiliuri, as to that titock, it wiiit acquired )>y them with, or as a pitrt of, the eontract by which tlic Ameterdan) bnndliolders pnreba»ed the Denver Pacific bonds, (J. I Muppose that was the way tbey got thorn. That was all. This $1,UU0,UUU of Block which the Auisterilam jieople got was a Inmus and ivccomiiunied the bonds, I suppose t— A, That is my information about it, Q. They really paid nothing for tbe slot;];, but bongbt the bonds which carried the stock with them! — A, Yes, sir; that is my uiider< standing, but I have no personal knowledge about it, for the transao* tion took place long before my connection with the railroati. ABTEMAS U. HOLMES, No. 10 Wall Street, New York, Thvmday, May 5, 1887. JUHN V. DILLON. bei[ig duly sworn and examined, testified as fol' £zamiueii'piir<'d by you as atlorucy in tbiu cousolidatii 1 do uul tUiiik »o. I ilo not reciill aiij ttiiug Unit wotiUl l)u of ^t^eIlt except wbat appears there. Q. That is, you have no pergonal kiiow]ed};u ul' the other inal A. Kxcept BO fur as I have tttated. Q. The preparation of records! — A. Yes, sir. reft cer I ©01 snl iiHsioiicr Andkicson. Jn repud to the upinJoDH that Mr. Ada referred to as hiivinB been given by JiidKt' l>iUou aw to the validiq* [erlaln acts of the <:ompiiny ; have we those opinions I The Chaibuan. Tliey had butter fnrin'sh nw with the opiidona. 'The ■Witness. I havM a eupy of the o]>ini»n that 1 brought willj whieh couHHel unite as to the power of the Union Pauiflfl Kail', ini)iany, eonsnlidated, to issue ten millions ol' new sloel; — if that 1 snbject of inqniry. Coniinissioner Littler. Yes. Commissioner Akdebson. That is the ten millionn of new stoclt the Union PacilieT That is not the thing. It is the guarantee of On't-i'ii lioiids, _ Till- Witness. Thiit is n separate opinion. I oan furnish you iti that ill print. I'o you wish thein produced now 1 I can do tt now. The Chairman. If yon have them with you, you had better prodi them. Tbt* Witness, nave you a eopy of that couipllatlon f rflaiidil booli to C'omuiisNiDner Littler, being a eouipilation of nuts of C'ongn relating to the Padlic loiids.] You will find that very usel'ul, ai can spare it. Commissioner Littler, Thank you ; I would like to huve it. Di this embrace everything I The Witness. Down to its date } yes, sir. It is very useful. H will you have these opinions of counsel entered f The Chairman. We will have them marked as exhibits produwid you. The Witness. I produce, on requent, a copy of my opinion, da New York, January 10, 1881, concerning the power of the ITDion cifii! Company to make a farther mue of atock. It is as followsj Hnit tlic UiiUiD Piictflo iiailwiiy CoiiijmQjr the ]>uwFr (o uitke b fiutlu^r li It wnt! ]irc>vl<1i'il l>y tin- mt of Cougrewof JulyS, 1^4, tliut lliv lupilnl atwif of, Union I'npiflo Itnitroiul Coinimny, aiiHitiriiitMl by tlia u«t of July 1, leffi, ului" ' HhAroa of tino inatfuil of •l.OUOcauli, »nil tbnt the iinmlwr of bIikivb hIiiiII li«l,i-uv{ instead nt lOO.OUO, tUiis flxinn thu iimonul uf aulboriti>d i^itpiinl ut SIOO.OWI.OW. t of July », 1UIJ4. BPctionl.) It in iirui'ulvcl ill tliu uexl ix.'tiliuu Ibut " Ibe copilnl stiKk uf ibtr Miit vomp ohnll nut Ijo iiifn>iiHt-il Iwyimd tha Bdtiisl cost of uaid road." in. I i>f I ht) line of mud jtnowa ns the KanNoa F&ciito. exlendinff I '■ I > nv. r, wn« at leiwl S:iO.O(H).OUtt, SMfk lioirever tu llin nmvm I'll 1,1-. iioHu iiiiiu«>>l. TliB TurHUiHat uburt«r uf ttiat ru>d llmltvlt I i-~:m,ihiu,UciU, UiitouiiHtriictiMluuclurtli<'Fixl«irHlIrai>"ritw-t, ' ■ iN-[ ^((.ii-d, over t.'IO,WKi,000, JOHN F. DILLON. 189 'flie act of Jnly 2, ISfrl, section 16, authorizes any two or more of tlio Pacific com- iianiefi *'at any time to unite and consolidate their organizations, as the same may or Mi Im^) upon such terms and conditions, and in sucli manner as tliey may agree opon, and as shall not be incompatible with this act or the laws of Iho State or States inwbicb the road of such comx)anie8 maybe, and to assume and adopt such corporate name and stylo as they may agree, iciih a capital stock not to exceed the actual coat of the f^di #0 to be coHBolidated, ^c/' By the act of CoDgross of March 3, 1873, as a part of what is known as the Credit Mobility' legislation, Congress among other things enacted, in reference to the Union pacific Kail road, that *' no dividend shall hcroaftcr be made by the said company but ixom actnal earnings thereof; and no new stock shall be issuetl, or mortgages or pledges made on the property or future earnings of the coii^panj' without leave of Congress, except for the purpose of funding and securing dbbt now existing or re- newals thereof. And directors or otilcers who shall pay or declare or aid in paying or doclarine any dividend or creating any mortgage or pledge prohibited by this act shall bepaDisned by imprisonment, &c." This act was confined to the Union Pacific Railroad Company. None of its provis- iottswere extended to any of the other Pacific roads. The penal provisions do not eitendto any but the Union Pacific Company. All the other Pacific railway com- panies, except the Union Pacific, were left free to issue new or further stock as aatburize Ixi dcMrable, if tlio {iroposoil policy Is ndnptr^I, tn binetKl nrtiolo 3 bo uo to DnlhorlKo llic pn>|>o*cit iucrcase nutl la huTc tlinl nmoiKliiicni, u tito pra[M>wil ist^io uf Mock, oxjircaa!)' rat.ilicd by tlin liolili'tia of tiro-tblttla of ih» coinpoaj'B aststInK ntouk. 1 OHTD dictiiled tlieiui viown ■» you huvc reqiiefltcd lo the ntcnflgrnpher. nnil truA them tuyou wilbouC manli elnlxiraiioii, bii timiynu mnyhnva tbobeuollt nf Hr. Ilaru ' '" 'ofaublu opiuiou. 1 fi'vl quiUt uun^ l.lmt my conclaaion >■ souud, nudBtiallbavi uu doniit ubuut it if li« cliaJl c One Biiggeatiou fiirtiiiT, whiil ^estod llinCtIlH#10,DOI>,0|ill linn IB MX obslnulu tu tlie prui"'" il bwcrkI tbtiHi Tliu legialiiiKiLi i tjllllu ii]i..1ilii;il|. 1.^ i-i !'■ I. ;. witliHiix . ..I .... :-.. . i>miiic(i 111 ihr pmiicT cnnnpciicm. It miiy bpsn li.iti in tli-''lVviil..riiil rliFiri.Tof llio Kanuw Podl [iili..L- ii.i>ii.' of ^l(J|.|i, 'I'liis olijreiion in«y bo n ilii' .S(i,r,- jisj H..II im im hil.TK'o for Bixtncn ycbn iif lli.i SlLili' III llic- l.iimgrrs.i'ioTiBl IcKiilAtion, BHlI -luiiouuf ibiMhnrtcrB of tbc I'Bcilio rail wiiy com- < -~ iLiitbnriicd n rmiKilidnttoTi at tbo Kuuiuii rneifle "h. lit tbo sci-tion which Dimferrpd tbn powrr to lucnosiatent with the Fed' JOIIX V. DILLON. of ciinil,dMM,.k,,ui:,M,. M,^^,l„ living Hint dxfd by tl.o i.iigi.jul .■luuLor of tfi. prumti Court, luidf r tiio TburmiLii uet, iti Ibc cuo of tlio ( pontliou), Hbuw tb&t Ibe Statu la);iaIntiou, bo fur n crnl, hiid lo );iVB way. Nrw Yuhk. Man IP, lesi. Tlifi VViTKRUS. 1 produce also the oi>iiiioii on the same BQbjpct cn StdntWBr of the Uaiou Pactflo Uuiliray Couipany to iucreiwe lt« rapital ^tock tu tb* ^ Mot of tlio coat of its Toad at now vonatinitod, aud I concur In it* rpsnlts. TbMe resnlts real tbroughont on the ground that the prcceiit cnrporatlnn hM 1 lec&l cousolldatlon BucDocdod to all the powers and rigbt« of tbo several camna^ ^ wrtli wbivh it has been thus connolidatcd ; further, Uiat tbo act ol CongniM of J ■mt 2, 19^4, governs ancb couBolidation and confurs the addltionul power t^ iuetmuw ^ capital lo the extent of the cost of the consolidated roads. an«i) Btiob coDBoiidation, to prohibit the isaua of Bbarea. not of the Union Paoilk bn« of tb« oonBOlidot«d roada. on the grnundtbnt oneof ttioeooonsolldated madB(t,h« Urtfiiii HkiSv} wjMpartj to tbo couBolidation aiidw had an vntevont ' " JOHN F. DILLON. 191 Repeal by iinplication is nofc a favorite of the law, aud I coucur with Judge Dillon that the act of 1873 leases to the roads legally consolidated under it complete author- iiy to issoe shares after consoUdatiou to the extent of the cost of the roads consoli- dated. laasnme that the proposed issue of shares is not to be for gratuitous distributiou among shareholders. Such distribution would not, I think, be warranted. The pur- pose, as I aoi assured, is that for each share thus issued there shall be paid into the tieasory of the consolidated corporation its par value. With these views it may be unnecessary to speculute as to what would be the effect of an issue of shares ultra vires of the corx)oration upou the title of those takiug the origiaal issue or of those to whom such issue might be transferred. It is clear that shares thus issued, being actually full paid, can never be subject to assessment at tike suit of creditors. As to the detail of carrying the plan into execution I have hardly given it thorough cxsmiDation. Unless there be some striking advantage in cauninu: such issue to be made under a vots of the board of directors, I should prefer that it should be made by afoteof the corporation. ( I \ Wall., 2^^. ) I agree that, as a general principle, subse- qoent ratification is eurcha8e, having be^^ made, any act of Congress prohibits or restrains the company from nsiug those l>on(^^ either by way of sale or pledge to obtain reimbursement of their cost. 2. It has been suggested that such prohibition or restraint is to be foiihd io t ^j fourth section of the act of March 3, 1873, which provides: "And no new stock sh^-^j be issued or mortgages or pledges made on the property or future earniugs of t-Ijc company, without leave of Congress, excej>t for the purpose of funding and securici^ debt now existing or the renewals thereof." Without adverting to the question whether this provision is not to be deemed iv. pealed by the 6th and 9th sect ions of the Thurman act, our view was and is that tbe provisions of the act of 1873 must be construed as limited to the property of the company upon which, by the terms of the charter, the Government held a hen, and to the eani- ings of that property which wore applicable to discharge the debt of the company to the Government. Substantiallj', the purpose, we think, was to prevent the creation of future liens upon the existing property of the corporation upon whioh the Gtoyem- meut had a lieu. It will be observed that neither of the trust iudeuturoa attempts to make any pledge of the earnings of the Uuiou Paciiic Company or to create any lien upon its road or the income thereof. 3. It has been further onacti'd in till' 9th section of the Thurman act that "allBum^doA to the United States * • * are hereby declared to be a lien upon all the propertf. estate, rights and franchises of every description granted or conveyed by the United States * • * oud also upon all the estate and property, real, personal, or mixed, asiiets and income of the said companies • • * from whatever source derived ■* * * But this section shall not be construed to prevent said companies, respect- ively, from using or disposing of any of their property or assets in the ordinary, proper, nud lawful course of their current business, in good faith and for valuable cousiden- tion." Tbe effect of this section, without regard to the proviso, is not to prohibit any ])le(lge or mortgage but to suUordinate any such i)ledge or mortgaj^e to the lien of the roviso, and thcpro])osed use of them is also, we think, clearly within the proviso. The company may, in our judgment, reimburse itself for expenditures incurreowers and so not warranted. If this be so, then clearly neither the act of lb73 nor the 9lh section of theThunnan act can have any application to those bonds, since it can hardly be suggested that that legislation is applicable or could be made so to property acquired iu coutraven- ticm to or disregard of the previous legislation of Congress granting the company* charter. Boston, December 4th, 1882. SIDNEY BARTLETT, JOHN F. DILLON, MITEMAS U. HOLMES* JOHN F. DILLON. 193 The Witness. That last opinion was transmitted by President Dillon in an official communication to the Hon. William H. Armstrong, Com missioner of Kailroads, in a letter dated December 5, 188i;, in which he goes into the sabject of the issue of these bonds and the policy and purpose of the construction of branch lines. It belongsrto the official history of the roads. If you care to receive it, I will make it a part of my answer j otherwise I have no desire to volunteer it. The Ohaibman. We would like to have it. The Witness. A copy of this letter is produced as a part of my tes- timony: LKTTEB OF PRESIDENT DILLON TO HON. W. H. ARMSTRONG. New York, December 5, 1882. Hon. William U. Armstrong, dmmisHoner of Bailroad!sf Jraahingtont D. C. DSAB Sir : I have received yoars of the 22d inst., statiug that a commuDicatioii from Hr. Arnold Leo, of New York, had been releired by the Secretary of the Interior to your office concerning a proposed further issue of bonds under the trust-deed of July l8t,1879, from the Union Pacific Railroad Company to the Union Trust Company of Kew York : also yours of the 23d inst. on the same subject, and desiring to be fur- niflbed with copies of the papers in relation thereto. I heg to hand you nerewith a eopy of the collateral trust indenture of July 1st, 1879, to the Union Trust Company of New York, trustee, also a copy of the similar trust indenture of September 1st, 1862, to the Ifew England Trust Company, securing the issue of what are known as tke fire per cent, bonds of the Union Pacific Railway Company (the date of this tnut indenture was after the decision of the Leo suit chaogod to April 2, 1883) ; also % eopy of the opinion of Messrs. Sidney Bartlctt, John F. Dillon, and Artemas U. Holmw, AS the counsel of the company, dated October 2d, 1882, in which they advise the company that the issue of bonds under the trust indenture of September 1st, 1882 (m eoDDsel had previously advised the company in respect of the similar indenture of Joly l8t, 1679), was a valid, corporate act, not contravening the statute of Congress of March 3, 1873, or any provision of the charter of the company or other legislation ^iplicable thereto. The trust indenture of July 1st, 1879, was sent to your ofiice at or about the time it was made, and your ofiice fully informed as to what had been done by the company thereunder. The bonds under this indenture have been issued and sold and are in the hands of investors throughout the world. No greater wrong could bo done to them and to the company as well as to the Government as the largest creditor of the company, than to have the slightest doubt thrown upon the validity of these bonds by any action of the Government or of its oflScers. The indenture of 1882 (now 1883), is simi- lar to the one of 1879. The principle here involved is one of vital importance as well to the Government as to tne company. It is simply this, whether or not the company has the ordinary power)) of a railroad company to borrow money, to sell or dispose of bonds to reim- borse itself for the cost of their acquisition, and to take from time to time such steps as an necessary to protect its property and to bold and secure the territory natur- ally tributary to its subsidized lines o^ road. When the Union Pacific road was char- toed it was supposed that as it traversed deserts and mountains, its principal reve- noee would come from through business with the Pacific coast and the countries beyond the Pacific Ocean. If we look to-day at the sources of income of the company we find that comparatively a small percentage of its net revenue is derived irom this source, and that the volume of its net revenue is derived from local business. If we examine into the cause of this we find, as stated in your predecessor's report for 1880, P^freSS, that the main lines of the company subsidized by Congress are ouly 1,815 ^lee in length, while what he styles the various ^* branch and feeding lines con- trolled by the Union Pacific " give it an additional mileage of 2,400 miles. [It has •'ace been greatly increased and is now 4,584 miles.] It was early perceived by the pompany that in order to secure the territory properly tributary to it, it was obliged ^ ^Qiro or control these *' branch and feeding lines.'' A list of those lines and of J Q^ir respective mileage will be found in your predecessor's reports for 1879 and 1880. ta the report of ISoO (p. 25) your predecessor says : "The policy of investing in these ^x^anch lines is undoubtedly the best for insuring a continuance of profitable business "^^ the main line, and so long as the Government has such a large interest as creditor, eannot but sanction and confirm these investments. If there is any way by which «ee branch properties conld be merged in or consolidated with thi^ mtw\\i '^iq^mxVs mmJd be desirable, so that ia any event or contingency the main pT0]^t\| ooi^ wi^ 13 P B 194 U. S. PACIFIC RAILWAY COMMISSION. he deprived of these valuahle feeders," You have recently made a thorongh examination of the roads of this company, and we cannot doubt that your own judgment will con- cur with that of your predecessor on this subject. To these branch or feeding lines the United States has never given a dollar of money or an acre of land. Imagine thefti lopped otf and all the revenue they briojg; into the company's treasury diverted to other roads. The disastrous effect of thii upon the main lino subsidized by the Government and upon which the Govommeiit has a lion is known to you, and can be easily ascertained by any person from the company's books. If the company had not promoted the building or acquiring of these collateral lines other roads would have occupied the territory and diverted this prolltablo business from the Union Pacific Company ; thus these branch liues which the Government has not aided directly or indirectly to the ext«nt of a /arthing, have greatly added to the value of (ho roads subsidized by the United States and on which it has a lien, thereby increasing and in no way imperiling or aifectinjo^ its security. The books of tho company will show that these '^ branch and feeding lines" hare been acquirid at their actual cost, without any inflation through construction com- panies or otherwise. Tlie Union Pacific uwulo, oi course, some expenditures in the promotion and acr|uisitiou of the control of these feeders, for which it has received and holds tho bonds of these companies. The transaction evidenced by the collatenl trust indentures is simply, that this company issuoa its own bonds to raise a fond to reimburse itself for the bonds thus acquired, depositing the latter as collateral to an amount considerably greater than the amount borrowed on its own bonds. Thecu> rent interest on the company's own obligations will be met by the interest receiTed on the underlying bonds, and the difference goes into a sinking fund, which is suffi- cient to pay the principal of tho company's own bonds at or before the time it b^ comes due. The company could, of course, sell the underlying bonds, and, if itchoee, could indorse or guarantee them. No lawyer can doubt this powci. What is d- and indenturefl , . „ ^.Government by the acts of Congress applicable to the company. Very respectfully, your obedient servant, SIDNEY DILLON, President. jector ( whofor the hrst time acquired a small amount of stock November 17 Ittti began to object the next day), be advised that in your judgment tho trust indent! do not show that they are in violation of any of the rights secured to the Govemn THK GOVERNMENT NOTIFIED AFTER CONSOLIDATION. By the Chairman : .. , ^: ^^'^^ notice given to the United Stalea <^\^iLmxi^\^^\:^<^^^^tfsk 'aatioo f — il, Tlie next day or the aame> d«i^. SIDNEY DILLON. 195 Q. Before the oonsolidatioD f— A. I^ot to my knowledge before the ooQSolidation ; I think not. Q. Were the Government directors consalted f — A. I would have to letar to the records to know whether they were present at the meetings which aathorized the consolidation. My recollection is that they were, and assented to it. Q. Assented to the merger of the Union Pacific Bailroad into the Union PadAo Railway Company f — A. Yes, sir ; the merger of the three com- panies into one. Q. The Union Pacific Railway Company f »A. That is the name. GOYSBinEBNT DIBBOTOBS' BELATION TO UNION PACIFIC BAILWAT. Q. What does the railway company regard as the relation of the Gov- emmeat directors now to their organization f — A. Do yon want the offi- cial history of that f Q. What is yonr opinion f — A. I had forgotten it myself in looking over the record in this quo warranto suit to-day since I have been sitting hersi I have a good many duplicate copies of that. That is where the State of Kansas attacked the validity of this consolidation, the report of which yon will find in the 101 U. S., 440. Ue Government directors have been recognized as sustaining to- wudsthe consolidated company the same relations which they pre- Tionsly Bostained towards the Union Pacific Bailroad Company; the origiiud act providing only for Government directors in respect to the Udiod Pacific Bailroad from Omaha to Ogden. There were no Oovern- neot directors in the Kansas Pacific, or in any other Pacific road. OHDOiissioner Anderson. We will go on with Mr. Sidney Dillon now. The Chairman. Yes, if there are no other questions. We may re- eiilyoii, Jndge Dillon, concerning other matters in the bill. The Witness. I shall be pleased to attend any time. JOHN F. DILLOK No. 10 Wall Street, New York, Thursday, May 5, 1887. SIDNEY DILLON, being duly sworn and examined, testified as fol- bw6: By Commissioner Anderson : Qaedtion. When did yonr relations with the Union Pacific com- menoet— Answer. I will have to get out a little document, for I had foigoiten, until I asked by telegram to-day, from Boston, when I did ooDmenoe, and I got the following reply : HIS RELATIONS TO THE UNION PACIFIC. I find by an examination of the papers in oar office that work was first commoncod on tbe constmction of the main lino of the Union Pacific sometime in 1863; it is im- mible to say at Jnst what period of the year. You were first elected a director on OelnberS, 1866. On March 11, 1874. yon were elected president and continued in m tint office until June 13, 1884. Q. Those dates are donbtless correct ? — A. I presume they aw sot it from the auditor in Boston ; from Mr. Mink. 0. DM jou remain a director from 1806 until 18841— A.. XeS^ I MiBM director now. n. 8. TACIFlf! KAILWAY COMMISSION. ^^| Q. You have at all times been Inrgely iaterested iu the cotc] A. Yps, sir, Q. A large holder of its aecuritiei* ! — A. Yes, sir. Q. And are generally familiar with both its construct] finances T — A. Yes, sir. EELATIONS TO KANSAS I'ACIPIO. Q. What have been your relatious to the Kansas Pacific I — £ this cuusolidalion was talked of, which you have befiu diaCQSSi to-day, my attentiou was drawn to it at that time, and I lookei back and forth to see whether it was a thing which we wautetl anything to do with. Q. 1 only asked when your relations with the Kansas Paci meuced T — A. 1 conld not tell you that. If you will please to dates of me I shall be much obliged. Q. Were yon the president of the Kansas Pacific previous to cles of consolidation f — A. I think I was elected about that tin Q. Had yon been a director of the Kansas Pacific before y president of the Kansas Pacific T — A. I thiuk not. Mr. UoLUES. I thiuk you were for a white. The Witness. For liow long a tiTnet Mr. Holmes. I thiuk for a year before, Q, Yon may take the explanation of Mr. Tlolmes; is that y( recollection, that yon were not a director before you were presi A. I cannot recollect ; iny attorney says I was a short time be; Q. Uo you remember how long you were president of that o before the consolidation was sigued T — A. 1 do not. Q. Did you take any part in its affairs as presidoatl — A. 1 1 Q. Hid you attend the meetings of its board! — A. I did. Q. Yon know that yoa were the president at the time the ai consolidation were sigued! — A. Twos; I snpimse Iwas; yes, Q. Yon esecuti'd them! — A. Yes, sir; I think so. Q. How l:>ng alter the articles of consolidation were signed remain the president of the Kansas Pacific t — A. Pardon me ing Commissioner Andebsom, Certainly. Until wo object yoa as much as you want to. The Witness. As Mr. Ham, my Hecretur>', says, I think 1 ai dent still, if there is a president iu existence. There has b tion since and no action taken by the Kansas Pacific sin RELATIONS TO DENVEE PAOIFIO. Q. What relation, if any, did you hold to the Denver I lime of the consolidation f — A. None. Q. Were you a director! — A. JJo, sir; 1 think not. Was It Mr, Holmes. I think yon were not. I do not remember. Oommissioner Anderson. If you have a memorandum of tl ing there, please show it to the witness. The Witness. Yes, sir ; I would like to see it, if it is fair. Q. It was January 24, 1880T— A. Yes, sir; I was. I was DC of it. Q. Oh referring to the miuntes of the meeting of January ! \ yon Snd yoa were a director of vhe Denvei Pacitlo t — A. Tea, . Q. The fact, then, had escaped 5o\w -mma. «rMm*'s\— K.. W if SIDNEY DILLON. 197 Q. When did you first acquire any interest in the Kansas Pacific stock t— A. I could not say. Q. Was it sometime before the consolidation f — A. I think it was. I could not say. Q. Did you act in concert with other persons 1 — A. I did not. Q. Were other persons connected with you in the interests which you had in Kansas Pacific stock and other securities of the Kansas Pacifici —A- No, sir. KANSAS PACIFIC POOL. Q. Were yon ever a party to an article of agreement made between joonelf and Mr. Ames and Jay Gould and others, made in April, 1878, relating to stock of the Kansas Pacific and other securities of the Kansas Pacific f — A. I think very likely I was. I cannot recall it. Q. Why do you say that no other persons were interested with you in ti^e acquisition of the Kansas Pacific stock and other securities 1 — A. I mean to say that I went into the market and bought stock on my own hook, as I pleased, and sold it again, and kept along that way probably until ttie time of which you speak. That was my meaning when you asked me the question. Q. I ask you now with regard to that time, which was April, 1878, did yoQthen associate yourself with a number of other gentlemen in acquir- ing interest in the Kansas Pacific stock ? — A. I did. Q. Who were those other gentlemen ? — A. I cannot tell you now, without the documents. There is some record of it, no doubt. I can tdl yon some of them. Q. Tell me those you can remember If — A. Mr. Frederick L. Ames and Jay Gould and Kussell Sage, and I cannot say who else. I think gome of our other Boston friends there, such as Dexter and others. I think 80. Q. Do you remember what that agreement was about, and how it eame about f — A. I cannot recall the substance of the agreement now. THB UNION PACIFIC AND KANSAS PACIFIC CONTEST AS TO PRO- BATING. Q. Do yon remember generally before that time what relations ex- isted between the Kansas Pacific Company and the Union Pacific Com- pany in regard to mutual business and freight ? The Witness. Was that prior to the time that I was president f Commissioner Andebson. I refer to before the time when you and Mr. Qoald arranged together to purchase securities of the Kansas Pa- dfle. The Witness. Will you ask that question again, please? Commissioner Andebson. I ask you, before that time, if you remem- ber what the relations were between the Kansas Pacific and the Union Pacific Companies with regard to through business and freight and traffic at competing points?— A. Well, the Union Pacific denied that the Kansas Pacific had a right to prorate through to the Pacific coast. Q. Was that contest a long and protracted and bitter one?— A. It was. Q. And the interests of both parties were entirely separate and hos- tile !— A. Yes, sir. MABKET TALUE of KANSAS PACIFIC SECUBITIES. Q. Do you know generally at this time, just prior to the agreement ^ Apn], 1S78, what the coDditiou in the market o£ lYie ISjaii^aA^^^d&A setmritlea was f-^A. Tbey were very low. 198 U. 8. PACIFIC RAILWAY COMMISSION. Q. Can you give us the figures for the stock, for iustancef— A. I could not give it at various times. It ran from 6 to 12 per cent, and along at different higher rates. Q. Did the Kansas Pacific stock not sell as low as 3f — ^A. It might have done so, but I never was lucky enough to get it. Q. How lucky were you enough to get it atf — ^A. I got some as low as 6. Q. In regard to the other securities ; what did the land-grant bonds sell J^t f — A. It is a matter of record. Q. Along in 1875 or 1876 what were they f — A. We can turn right to the stock record, or the records of the stock list in Wall street, and see ; that shows exactly. It is so long ago that I cannot say what they were worth at that time. I do not know now ; I do not remember. Q. Of course we know that 5 but I was merely testing your memoiy as to these transactions. Now, to pass to 1878, please look at the paper, exhibit No. 1, of May 5, 1877, and state whether that is the instrument to which you became a party — what was known among you gentlemen as the Kansas Pacific pool t — A. I do not know. I never heard the pool mentioned so much before as I have to-day. Q. How did you refer to your interest in that t There must have been some way of referring to it. — A. We did not refer much about it We went and bought our securities and put them together ; that is aboat all there was of it. Q. Please state what you mean by putting them together. Yon de- livered them to a certain committee, I suppose t — ^A. Yes, sir. Q. Who was the committee t — ^A. I cannot say now. By theC'HAiBMAN: Q. You say "we;'' whom do you meant — A- I meant to say that I bought the securities, and they were put in. You may, if you please, call it the pool, for the sake of Commissioner Anderson. Brevity ? The Witness. Yes, sir. THE KANSAS PACIFIC POOL COMMITTEE. By Commissioner Anderson : Q. It appears from the face of the paper that Mr. Ames, Mr. Greeley, and Mr. Villard were the committee with whom the securities were de- posited. Do you recollect that? — A. I presume so, but I have no re- collection now. Q. Do you recall the business of that at all — how it was conducted 1 Were securities from time to time turned in for account of the different parties, and were sales made? The Witness. Do you mean bought and sold ? Commissioner Anderson. Yes. A. I do not think there was any purchase and sale. Q. None sold as a pool ? — A. No, sir. Q. Do you not remember that there were different purchases made, so that the securities increased from time to time ? — A. That does not mean sales. Q. Do you know who attended to the book business of that poolt— A. 1 think Mr. Calef had it ; I am not sure. Q. You think he kept the accounts ? — A. I am not sure, but I think he did. SIDNEY DILLON. 199 POOL ACCOUNTS KEPT AND RENDERED. Q. Were accoauts rendered to you f — A. No, they would not be ren- dered to me; it would be rendered to the pool — to the committee. Q. The committee would render the accounts to the individuals when tbej were about making a dividend, would they nott The Witness. What do you mean by " a dividend " 1 Commissioner Anderson. I presume that when these securities vare dispc^ed of, as they were finally, and realized into money, that there must have been a division according to the interests of the par- ties* Is that not so t A» I did not know they realized any money on them. Q. Did yoQ never realize any money for the securities you put into tliia poolf — A. No, sir; not to my recollection. Q. What did you realize for them f Was nothing ever given back ^ yout — A. I cannot say how it was arranged, but I do not recollect receiving any money. Commissioner Anderson. I suppose you received bonds. l!be Witess. I cannot say how it was done. There was an exchange ffom that general class of securities into some other form in the Kansas pacific, but I cannot say how. Q. Is it not perfectly clear that, whether settled in money or in bonds, \tira8 absolutely necessary that the person who kept the accounts ^oold make up an account in which each member of the pool should \^ able to see what he was entitled to receive, whether in money or in bondsf^A. When the pool was consummated, and it took a different shape, it was. Q. Was such an account rendered to youT — A. I presume it was, but I cannot recollect. Q. If rendered to you, it was rendered by Mr. Calef, to your best knowledge t — A. I think it was Mr. Calef. Q. Do you know whether he has the books of accounts T — ^A. Let me correct myself. Mr. John F. Dillon. Mr. Ham is Mr. D illon's private secretary. Mr. Dillon is not accustomed to records and papers. He is probably mis- taken aboQt Mr. Calef. Mr. Ham will tell yon. Mr. Ha3L Mr. Greeley at one time furnished all the securities and re- ceived them, and they were afterwards turned over to Sage, Dillon, and TiBard. The Witness. As to the secretary, I cannot tell who it was. It was not myself, nor to my order. Q. What the Commission desires to get, is an account of the flnan- dai management of this pool, and how it began, and how it resulted. Can yon tell us who has the books which show that transaction f We should be glad to see them. — ^A. I think they can be furnished by Mr. Ham. Q. Do you remember that the parties to that arrangement were sub- stantially divided between representatives of the Union Pacific Bailroad and what was known as the Saint Louis party ! — A. There were both parties in it Q. Did both parties remain in the pool until the end, or did one party survive the other ! — A. That I could not say. I think they remained in it, bnt I could not say. BUYING OUT THE SAINT LOUIS PARTIES. Q, Do yoa not remember as a matter of fact that t\i<^ ^%iak^lJQ /w^ were bought oat f~A. Not wholly, I think. 200 U. S. PACIFIC RAILWAY COMMISSION. Q. Do you not remember that their control was bonght ont, and large proportion of their securities were purchased from them t — A. 1 think there was a control bought. Q. When was that done t — A. 1 could not say. Those papers thi Mr. Ham will furnish very likely will give you that data. Q. Was it not done just about the time that you were elected pres dent of the Kansas Pacific ? — A. I could not say what time it was. Q. Were you consulted as to that purchase of the Saint Louis inte est I — A. I presume I was. Q, Did you pay up part of the purchase price t The Witness. Do you mean to say, did I take a part of it f Commissioner Anderson. Yes. A. I did. Q. Who else took a part of it! — A. I could not say; I presume tn^ -^^ rest of them did. Q. When you say "the rest of them," whom do you mean t — A. Thazz3)8( whom I have named heretofore. Q. That is, Mr. Gould, Mr. Ames, and Mr. Sage f — A. I cannot s -^may who took it. I do not know now; I do not recollect. HOW THE PRICE WAS FIXED. Q. Do you remember how the price came to be fixed at which securities were to be bought! — A. No, I cannot say how it was do more than to buy anything else — because they wanted to sell them. Q. Do you remember how large a transaction it waS; and how mu^ch money was paid to the Saint Louis people ! — A. I do not. Q. Do you remember that it was more than a million dollars! — J^^^ » I do not know that it was all done at one time. I am not sure. Mr. Ham. It was not a matter of the pool at all. It was an individ ""lal transaction. Q. Some members of the pool, individually, bought out some ot^ "lier members? — A. That is true. Q. My inquiry is, just how large the transaction is, in order th^^t I may see whether you have any memory regarding the transaction miDfSk million dollars. — A. I think 1 recollect now, that it was bought out by individuals not in conjunction with each other, but it was bought J QSt because the parties thought they would buy it. That was ray case — Q. The result was that all the Union Pacific people bought out, t^ub- stantially, all the Saint Louis people, or bought a control ! — A. That i ^s it. >IR. DILLON ELECTED PRESIDENT OF KANSAS PACIFIC. Q. A coincidence, if not a combination. \Vell, after the Union Pa- cific party had obtained control, do you remember the fact that yon were elected president of the Kansas Pacific?— A. Yes, I think I was elected president after they got the control. I think I was. I do not know whether it was after or before. 1 could not say. Q. Do you remember when 3'our nephew. Judge Dillon, came on here from the West? The Witness. When he joined the company? Commissioner Anderson. When he became counsel to the Uuiou Pacific Company! A. Yes, sir; I remember it. Q. Do you recall the fact that you informed him that the executive committee had intimated that they desired to avail themselves of ki* rvices as counsel for the roadi — A. 1 (Vo \io\,T^e.«\\^^\»lw!i\», SIDNEY DILLON. 201 BEGOlfMBNDATION OF JOHN F. DILLON AS COUNSEL. Q. What fi«5te do you recall iu regard to itf— A. I recall the fact that I recommended him, and Mr. Goald, who was in the neighboring office to me, being a largely interested party in the Union Pacific, said that he woald like the company to have him. You know that a part of our directors were in Boston and part were here, and we could not at one time make any particular arrangement, except by telegraph or no- tice. We recommended it, and he was called as counsel. Q. This occurred when, do you say! — A. Judge Dillon can speak. Commissioner Anderson. I want to see how closely you can put these things together. The Witness. I cannot put it together. Q. Do you remember the fact that it occurred shortly before the con- solidation f — A. It was before the consolidation ; but I cannot say how long before. Q. Do you remember that it occurred after you had been elected president of the company t — A. I do not recollect whether it was after or before. Mr. John F. Dillon. I want to say, when he says he recommended me, that I never applied for the position, directly or indirectly. I have a little pride about that. The Witness. Mr. Gould said, *'By all means, we want him,'' when I recommended him. This was how the point came up. MB. DILLON'S HOLDINGS OF KANSAS PACIFIC SECURITIES. Q. Can you tell us how much stock of the Kansas Pacific Company yon owned just before the consolidation ? — A. It shows for itself, I think. Q. What was it you think showed for itself! The Witness. You were pointing at something. Commissioner Anderson. Mr. Norris is pointing out the vote to the ratification, and I do not know whether that would be a correct answer to my qaestion. The Witness. I suppose that is correct, 6,118 shares. Q. Do you remember whether any important change of interest iu the amount of stock held by you had occurred at about that time t — A. I do not Q. So that that is about what you held before the articles of consol- idation were signed t — A. I think it was. Q. Did you hold any other stock in any other name t — A. I did not. Q. Do you remember what other securities of the Kansas Pacific you hdd at this time! — A. I had not many others ; I cannot say what they were now. Q. Any consolidated bonds ? — A. I could not say ; I had not a large amount. Q. Do you know whether you had received any consolidated bonds — the interest you were entitled to receive nndei the articles of agree- ment of Apnl, 1878— at this time ? — A. I do not know. Q. You do not remember that! — A. I do not remember ; no, sir. Q. Do you remember the fact that you did receive whatever bonds you were entitled to receive for the securities represented by that agree- ment!—A. Yes, sir; I presume I did. Q- Do you remember whether you kept them any length of timeaftfu* you obtamed them f — A. I think I did. 202 U. S. PACIFIC RAILWAY COMMISSION. Q. Do you remember whether, at the time of the consolidation, ya owned or' held any stock of the Denver Pacific Company f— A. I thin I did not, any more than if I was a director ; I might have had a littl to make me a director. That was it. Q. Do you remember the fact that at the meeting for ratifying th< _ consolidation by the Denver-Pacific stockholders yon voted on som^^^ stock f The Witness. Some stock of what!. HIS HOLDINaS, AS TRUSTEE, OF DENVER PAOIFIO STOCK. Commissioner Anderson. Did you vote on the Denver Paci^^ stock f — A. I do not recollect it. I may have done it. I do not kno^^^ ^ Q. Do you not recollect the fact that you voted on over 39,000 shar*- of stock f — ^A. I do not recollect it. I mi^ht have voted on it. Mr. Ham. That was the stock of the Kansas Pacific, put in his nai as trustee. The Witness. When you refer to me as an individual Commissioner Anderson. It is signed simply, ''Sidney Dillon, ^ trustee." The Witness. Mr. Ham has stated the facts. Q. What are the facts f^A. I voted it as trustee, I suppose. IshouA/ have said I had not voted at all. I had forgot ten all about it. Q. Did that stock stand in the name of Sidney Dillon, trustee t — A. 1 suppose it did, or else I should not have voted it. Q. For whom were you trustee ! — A. I do not know ; I cannot recol- lect. You must excuse me if I do not know. I hate to be too ignoraot. Commissioner Anderson. I must object to the witness being assisted by his secretary, except as to facts and names. Q. You do not remember whether there was a certificate of stock for 39,000 shares of stock in the name of Sidney Dillon, trustee! — A. I do not remember. I should not have remembered the transaction if it had not been brought to my notice. Q. Do you remember tlie fact that you surrendered, either individually or as trustee, 39,000 shares of Denver Pacific stock, and that you re- ceived stock of the Union Pacific Kail way in exchange therefor !— A I knew that was done ; but until this moment I was not aware that I wa» the custodian of the stock. Q. You know that it was done? — A. That is to say, I understand was done. Q. Do you know how that stock of the Union Pacific Railway wi delivered in exchange for the 39,980 shares! Do you know who it ? — A. The Union Pacific got it. Q. The Union Pacific delivered it, did it not ?— A. It bought it, ai it was put back into the treasury again. Q. Into the treasury of what company ? — A. Of the Union Pacific. Q. The 39,980 shares ?— A. The exchange which took place— the De ^' ver Pacific stock — the avails of it went into the treasury of the UniC^^^ Pacific. .——1, Q. Do you mean of the Kansas Pacific or the Union Pacific f — A. T^ ^^ Union Pacific Railway Company. Q. So that your statement is\hat the 39,980 shares of Denver Pacfc- ^^ stock were surrendered to the consolidated company, and that the c**^' solidat^d company issued new stock for the same amount, and that tX*^' Dew stock WAS sold, and that the proceeds of that-sale were deposi'^^^ . the treasury of the Union Paeldc 13tia\\v?vi^ Ciovjvv'iSbW'^ % — A. I measi to ^ 1 SIDNEY DILLON. 203 say that the stock was deposited in tlie treasury of the Union Pacific Bailway Company. Q. What stock was deposited f — A. New stock. Stock of the Den- ver Pacific the Union Pacific acquired, and for it it gave its own stock, i^d it was placed in the treasury of the Union Pacific as its own prop- erty. Q, What was placed in the treasury of the Union Pacific ? — A. The 0tock or the avails of it. The new issue that was made. Q. Then we must find 39,986 shares of Union Pacific Bail way stock ixithe treasury of that company t— A. Yes, sir. Q. And that is what happened, is it! — A. Yes, sir, as I under- stand it. AND THE NEW ISSUE SEOEIYED IN EXOHANaE. Q. To whom was that new stock delivered ; who received it ? — ^A. I suppose that I, as president of the road — it would come into our treas- ury y I could not say who received it. Q. Who surrendered the old certificates of Denver Pacific stock ! — j^. It was a formal thing which took place, and I cannot give the names of 'Who surrendered it, or of how it was done ; but it was all ou record* It is all in your name as trustee T — A. Yes, sir. |. Could it be surrendered without your signature f — A. I presume no^, but I do not recollect how the transaction took place. Q. When that surrender was made and you api)ended your sigua- tuj-e, was a certificate for an equal amount of Union Pacific stock de- livered to you personally t — A. I cannot say whether it was delivered to me personally; it might have been delivered to me somewhere, as tkk^ proper custodian of it. Q. Was such stock delivered to any ooe for your account f—A. Not fox* my account personally. Q. For whose account was it delivered ! — A. For the Union Pacific. Q. Did that stock remain in the treasury, or was it sold f — A. I think it ^^as used at various times for the benefit of the Union Pacific. Q. Can you be positive about it, being president of the road f — A. I am quite positive of it. Q. What benefit was it used for f — A. For the purchase of various seourities which were necessary, or for building lines which we built or irere about building at that time ; I could not define it into one par- ticular channel where it went, but it went as if it were money that had be«D paid in to be used for any purpose which migh inure to the bene- fit; of the company. TOTAL UNION PAOIFIO BAIL WAY STOCK. <2. What is the total amount of the capital stock of the Union Pa- <^i fie Bailway Company t The WITNESS. At this time 1 Commissioner Andebson. Immediately after the consolidation. A. I coald not say without getting the report j the report shows; it an open document before the public. Q. Will you refer to the articles of consolidation t They will tell you. at article 3, and give the exact figures there. — A. The capital of said Union Pacific Bailway Company shall be $50,762,30Q| ing the total aggregate amount of the outstanding stock. Commissioner Anderson. Those are the articles of consoUdali l£ned Janoaiy 24, 1830. I now show you the report of ^otsct imI . PACIFIC RAILWAY COMMISSION. tlie year 1880, and you will i>ercoive tUat the capital aWck of tbe com- Jinny oiitAtiiniling is llio exact sum you liavc given, $5U,7G'J,300. The Witness. Yes, air. Q. Will you please explain liow, if the 39,380 shares liail been de- posited in tbe trensmry of the Union Faciflo, it is possible that its outr standing capital should have been the total capital of the company 1 — A. I do not know why it sliontd not be ; 1 cannot fnlly understand yon. WHERE DO THE 39,986 SHAKES APPEAR! Q. ir you had placed the 3'J,980 shares of Ibe capital stock of the Union Pacific stock back into the treasury of the compuny, then ita whole capital stock would not then be ontstnndint;; is not tbatsot — A. Tbepo might be stock in the treitsury of the company, and counted as capital stock, and still the company would be the owner of it. Q. Then it would have to appear on the other side of the balance- sheet, if the company charge Itself with its whole capital stock, in order to make it balance. You would have to show that 39,0(i0 shares were on hand ou the other side. Will you refer me to anything in your Hnancial statement as to that! — A. I cannot refer to it; 1 shall have to ask yon to have the secretary explain that when you bring him on the stand. Q. I oall your attention to the other side of the balance-sheet, where there is an entry stating the amount of bonds and stock of the company . which the company has on hand, and which entry I read to yoa: " Bonds and stocks of this company owned by the company, $340,662." 1 ask yuu if that company had on hand 39,000 shares of stock, over $3,000,000, where it appears on the balance-sheet t — A, I cannot teB yon ; I only say to yon that I would like to have you accept the testi- mony of my secretary in this matter; ! am not a close accountant of those things and figures, and therefore 1 could not say that to-day. (j. May you not be mistaken in your statement that tbe stock which was issued by the Union Pacific Railway Company in exchange for the 39,0SG shares of Denver Pacific stock was placed back in the treasury of that company 1~A. I think I am not. Q. And yet you are unable, as president of this company, to show in your financial statement where that appears! The WiTNEas. If you will allow me to speak to my secretary. Oommismoner Andbrso.n. Certainly, Mr. Ham. That report is a year after the date. Commissioner Anderson. It may have been sold in that time. Mr. Ham. It may have Iwen sold in that time. THE STOCK DISPOSED DP. Commissioner Andkkson. Is it your statement that that stock wanl soldt ^ Mr. Ham. Yes, sir ; the stuck was all parted with before that time. ^ Mr. John F. Dillon. I will state that Mr. Ilam is prepared to telM yon all about it. The Witness, What I want to state is the truth of the thing, as I know, as I nmlerstand it. If 1 am in error I am in error ignCM rantly. Mr. John F, Dillon. Mr. Ham says he understands it. Tbe Witness. I think you will find that no man belonging to tkji UnJOD Pacific bad one dollar's mVeieBtra ttiaX,a.ft ^Xxft-j \\a.\-'- ' * A aa SIDNEY DILLON. 205 eas^i for the last ten years, of holding that property and patting it jQ to tneir own pockets. I hope and trust yon will so find, because it is go, m fiur as I nnderstand it. THB SUIT TO EELEASE DENVER PACIFIO STOCK* Do yon remember calling Mr. Holmes to have an interview with with regard to a suit to be brought for the purpose of getting 29,986 of this Denver Pacific stx)ck out of the consolidated trust t — A. I I did. ^. Do you remember who was present at that interview t — A. I do ^. Do you remember that you did see Mr. Holmes! — A. I think I MMt have seen him. If you had asked me if it was Mr. Holmes, except m what I have heard today, or Judge Dillon, I should have said it some one of the attorneys that I talked with about it. ^. Do you remember the conversation at all t — A. I do not now. 4Q. Do you recollect telling him that you desired expedition f — A. I not know the conversation. I know that we wanted that passed D. <2. You know that you wanted the Denver Pacific stock got out of tbst trust for some reason ! — ^A. I did. « WHO SUGGESTED IT. Q. Who first suggested that to yout — A. I do not know. Q. Do you think you suggested it to Mr. Gould t — A. I cannot say whether I suggested it, or whether Mr. Gould suggested it, or whether it was talked of as a general thing; I could not say. Q. Do you remember that it was talked about t— A. Yes, sir. Q. And that you then sent for Mr. Holmes ! — ^A. I say I could not 8ay it was Mr. Holmes, but I think so. Q« Was Mr. Gould present at the interview with Mr. Holmes ?— A. I cooj^d not say whether he was or not; it has escaped my memory. ^^ Do you remember telling Mr. Holmes who would represent the tni^tees of the consolidated mortgage!— A. I do not. THE TEUSTEES OP THE CONSOLIDATED MORTGAGE. Do you remember who were the trustees of the consolidated mort- le Witness. Of the Kansas Pacific? •ommissioner Anderson. Who were the trustees of the Kansas Pa- consolidated mortgage? I suppose that Mr. Gould and Mr. Sage were the trustees, as I r^^^^)llect now. ^^. What next do you recollect about that suit t — A. I recollect we ^^-^ a suit, and it passed through its regular course, and I cannot give *^^^ terms of it I should like one of our attorneys here to give the bal- of it. I only asked you what you recollect about it. — A. I recollect that had a suit and it was in court here, and was passed on. ^..Have you told us all that you remember about it f — A. I do not '^^K^ow that I can recollect much more about it. ^ Do you recollect the fact that you were a witueaa m tbi^it «ait»t— I 'mght b»ve been ; yea. U. S. PACIFIC RAILWAY COMMISSION. Q. Do you rocolleot that fact t — A. Yes. Q, Do you remember who the other witnesses were I — A. I do not. 1 do recollect being a witness, now. Q. Do you remember "hat you were examined sibout t— A. 1 think it was as to the valuo of it. I think so, but I am not sure. , Q. What means had you, then, for knowing anything aixtut the value; of the Denver Pacilie stock t — A. I knew where the road was looitted,^ and I knew that the earnings of the road were very light. That ia, that was the report to me. I think it was in the hands of a receiver. I ainf not sure. Was it, Mr. Uolmesi Mr. Holmes. It was at that time. The Witness. The Denver Pacific was at that time, I think ; I am not sure. Mr. John F. Dillon. You get all wrong, if yon try to i-ecollect what happened ten years ago. I do not think tt was. Mr. Uolmen thinks it was. By CommiBsio'jer ANDEnaoN: Q. Where lawyers difl'er the parties get their rights. You were exatiik iued at some lenglb as to the value of that stock f — A. Yes, sir; I pre- sume I was, WHAT WAS TO BE DOXE WITH IT IF QELEASED. Q. Do you remember that some arrangements had been made aa td what was to bu done with that stock, if you got it outT — A. I thfnK there was an arrangement made, but I cannot remember what the talk was particularly. Q. Do you remember what the general arrangement was that bad been madet — A. The general arrangement was to make it » part of tfafl system, the roa«l. Q. Do you remember iiiiytliing that had been arranged in regard td the surrender of bonds of branch lines in exchange for that stock t — Jkj No, sir ; I do not. Q. Do yon reuieniber that any arrangenienlis had been made bj which the bonds of the branch liues of tlie Kansas Pacific were to bi surrendered to the Kansas Pacific in exchange for the stock T — A. I dc not recollect that that took place. It might have, Q. Or that anything had been fixed upon which was to be oarrie< out between the Kansas Pacific Compitny and yourself and Mr. tiooJJ and Mr. Ames and others in regard to that stock t — A. It wn« f): that if we got it, to place it where we did place it. Q. Where did you place itt — A. We placed it in the Union PMnfl* treasury. Q. Id exchange for whatf — A. Union Pacifio stock. Q. now much Union Pacific stock I — A. The same amount. Q. What was that stock worth T VALUE OF UNION PACIFIC STOCK AT THIB OS/ KXCHANOB. Sbe Witness, Which stock I Jooimissioner Akdeeson. The stock of the Union Pacific that yc |/or the stock of the Denver Pacific t— A. I cannot say what it wi nRh at that time. , Was the Union Pftcifio stock selling at par at (hat timet— A< Yea ieatne it was. ■ ^ SIDNEY DILLON. 207 Q. Then the Union Pacific stock that you got for these 29,986 shares was worth $2,986,000, taking it at par t— A. I admit that for the sake for an answer. Q. Yon say you knew that it had -been arranged between the parties in interest to have that done, and it was donet — A. It was done. Q. please examine the signature to the deposition which I show you, and sts^te whether it is yours. — ^A. It is. Q. I>o yon recollect the fact that that is the signature you made af- ter giving your deposition in this suit f — A. I presume it is. Q. I>o you remember being examined before Mr. Buggies f — A. I cannat^ say who it was I was examined before now. Q. X>o you remember being examined before some referee in this gujt t — -A. I presume I was. Q. X>o you remember whether your evidence was taken down at length in loD^'hand writing or by short-hand writer? — A. I do not know. Q. I>id you read this evidence over before signing it f — A. I have no doubt I did ; at least I suppose I did. EVIDENOB OF MR. DILLON BEFOBB THE BEFEBEE. Q. I will read some of the evidence to you, and see if you recollect it as given : Q. l^liat is your estimate of tlie value of the stock of the Denver Pacific Railway and Tel«mph Company, which is now in the possession of, and owned by, the Kan- las Paeino, relieved from the operation of the tmst so that it can be disposed off — A. TtKD valae of this stock to the Kansas Pacific road at any time, I consider, is nominal, as far as receiving any dividend or financial advantage is concerned. I do not thiok there is anythino: in it on that noint. Do you remember making that answer! — A. Yes, sir. Q. ^hen the referee said to you : That 18, it has not earned, and is not expected to earn, dividends f And you answered : No, air. Then the referee said : Supposing it to be freed from this mortgage, so that it can be disposed of by the KftDsaa Pacific, what, in yonr estimate, would be the valne of it then f To ^hich you answered : I feel to^ay that the road is not worth its mortgage debt, and that we may yet hsTe to foreclose it ; that because of the peculiar situation in which it is placed it will never be able to pay the interest on its first mortgages; and I do not believe tbe stockholders will ever receive a dividend. All that you remember saying t — A. I think so ; yes, sir. Q. Toa were asked then : What do yon estimate the value of the stock to the Kansas Pacific Company, or the trustees of this mortgage, as based upon the control which the ownership of the stock wonld give to the company or the trustees f And to that you answered : I Talae it worth something. That is, for that purpose T — A. <^It was worth something.'' Q. Then the question was put to you : St%t« the outside sum which it would be worth to the Kansas Pacific Bail way Ck>m« V^7 f^w that oontrol, or freed from the present mortgages. 208 U. a. PACIFIC RAILWAY COMMISSION. To wliich ymi said: Tliisstoak, tiud up ia trunt, n« I said befbre, I do not ooniider norlh nayMog , .. carrv out oerCnin tbiiigs I tliink it might bo wortb to the Kftoiaa Pociflo Compan; ■ Hiiinll aaai, auy $-100,009 or frlOO,lNXI; sometbing iti that neighborhood. I iMk yoa wUaC is the inoaiiiiig of, or what did yon refer to b;, the wards " certain thiols," ia that an-^wer which I have read to yoa t — A. I HUpiioHe it meant for the entire coDSolidation to take place between the UnioD Paci&e and the Kansas Pacific ; I suppose that was my meaning at that time. Q. Have you not stated to-day that the arrangement bad l>eeu made by which, if certain things were dotie^that is, the oousolidatioti was to take pla^e — that stock of the new company to an equal amount with the Denver Pacilic stock was to be issued in exchange for it T — A. 1 do not know that 1 said that ; I wish you would refer baok to it. Q. 1 just refer to you. liad it not been arranged that, if thecoQBoli- datioii took place, you were to receive, or there was to be issued, ii change lor the Denver Pacific stock, au equal amount of Union Pttcifi» stock ! — A. It was understood tliere would be. Q. Did you not know on that day that if the consolidatiou took place and you received the Union Pacific Railway Company stock it was worth par 1 The Witness. The Union Paciflc, you mean t Commiaaioner Andebson. Yes; that if the consolidation took plm and you received — I mean the owners of thi-; stock received — the UnioL Paciflc Railway stock, it would be worth par. — A. I do not liuow tha rhe stock Wiis worth par at the time- It would have been wortU wbaf ever it was worth at that time. Q. You know tlio market value of that stock nt that time T— A. ] suppose I did ; I know I did. Commissioner Andekson. Mr. Holmes, we are safe in assuming that it was worth par. Mr. Holmes. That is my recollection. Q. Then that Denver Pacific stock, if the consolidation went through, was worth $2,98(5,000 I Is that not so?— A. Yes, sir. THE EXPLANATION OF TDK EVXDBNOE. (j. liow do you explain this sentence in your answer, that to cfUTi out certain tbtugs, which you liavo said now were this very oonsolldl tion, that you think this stock might be worth a small aum, say $200,00 or 1300,000 1— A. I might say Ihat, and it might be worth more, need not say it would bo worth two millions and a half. I eould uy I was worth that. Q. That is the way you explain it t That it did not excocil a liigbfl sum t — A. The reason why that stock was worth anything to tbe Kan aaa Pacific was because it was a link which wanted to be put in betwe the two, and it bonnd the two roads together; but by itself it waeo worth anything. That is the whole position of it. And if the Unit. Paoific made it worth par by taking it, it was her make .ind tiobod; else's. Q. You were then stating tlio exact fticts, a^ you believed thum be f— A. I was not obliged to say it was worth $2,500,000 or $3,000,< at that time. Q. You put it at a low basis !— A. I put it at a sure basis. I thotul ii was XFoHb Ibat. ^" SIDNEY DILLON. 209 Commissiouer Anderson. I call your attention to the fact that the leferee then said this : ^' Not to exceed $300,000?" To which you an- gwered, ^^ No, sir ; that is my estimate of it." The Witness. That was my estimate of it at that time. I might have estimated it too low, or there might have been a slip up on it. Commissioner Anderson. This answer is made on the supposition that certain things are going through, for you say, to carry out certain thiogs it is worth that, otherwise nothing 1 The Witness. Yes, sir ; it was not worth to the Kansas Pacific any 1300,000, or anything else, except that the Union Pacific of itself comes in and makes a consolidation^ and makes it worth it. There is where it comes in to be worth something. The same as a man's note which goes to protest, and a good man puts his name on the back of it, he makes it worth par, when to-day it was not worth the paper on which it was written ; and that is the same as that stock was at that time. Tlie Ohaibhan.. The man whose name is on the back of the note has to pay for It 1 The Witness. The man whose name was on the back did pay for this. The Ghaibman. That was the way with the Union Pacific ! The Witness. Yes, sir ; it was its interest to take it, in"other words. Commissioner Anderson. The only question I want to get at is your eixplanation of that answer, because the answer as given is, to carry out eertain ^ings it may be worth a small sum, and the facts appear to be that if these things were carried out it was worth $2,900,000! The Witness. It might have been ; I did not wish to estimate it too high; I may have been mistaken. Q. Is it not a fact that if you estimated it high the court could not re- lease the security, except on a payment of the amount of your esti- mate f — A. I do not know whether that would follow or not. Q. Did yon know that this stock at the time was a part of the schedule of property held by the trustees of this mortgage for the security of the bondholders? — ^A. I did ; but it was worth nothing to them. WHAT WAS GOT FOB THE DENVER PACIFIC STOCK. Q. Did yon know that the trustees had no right to release it, except they got an equivalent for it f — A. They got more than an equivalent for it. They could not have sold it to anybody else except to the Union Pacific for that amount. Q. What did the trustees get for this stock ? — A. I cannot say. The books will show. I cannot say, but Mr. Ham will give you that. Q. What did the Kansas Pacific Company get for this stock t — A. I cannot say that. Q. Doyou not know that they got a lot of bonds of the branch roads ? — A. I say I cannot state it. It is a good while ago. Commissioner Anderson. 1 am trying to refresh your memory. The Witness. If I could state it I would most cheerfully. Q. Yon have no recollection on the subject at all ? — A. Icouldnotsay how the transaction took place, only the material transaction ; and that has been impressed on my mind for the last ten years, and I hoped that lome time some gentlemen would get together and accept the facts that that was placed in the Uoion Pacific treasury instead of in the hands of apecalators or the directors. Commissioner Andebson. If it will gratify you, I will say right bec^ that Bs a commissiouer I will be entirely satisflied witYi t\i^ «s.^«Kia^iL 14 P R 210 U. S. PACIFIC RAILWAY COMMISSION. of this tranactiou whenever it is made clear to me that the Union Pa- cific and Kansas Pacific Eailway companies received the entire value of these securities, and that you did not. The Witness. I have no doubt of it. Mr. John F. Dillon. I would like to have you ask him whether he got any personal profit. Commissioner Anderson. What is the use, when he says he cannot remember his accounts. The only way is to show that the company did get it. Mr. John F. Dillon. I think you will get all the facts from Mr. Ham. (3ommissioner Anderson. That is all I want on that subject Gommisuioner Littler. I do not suppose it desirable to examine Mr. Dillon in relation to the general management of the Union Pacific, isitf Commissioner Anderson. I think when we get our accountant's re- ports we can do it much better. I thought we would confine our efforts, at present, to the Kansas Pacific consolidation, and finish that. The Witness. I should think that there is a great deal of detail here that if the Commission would take from the officers that have it in charge, the Itpoks and papers and accounts, they would get at it in sacli a shape that the balance which they want of the officers would come a great deal easier. Commissioner Anderson. That is whaj: we are endeavoring to do. By Commissioner Littler : Q. 1 would like to know how old you are. The Witness. I am over seventy years old, and I have given the bet- ter part of my life to the Union Pacific, and for only about three years of my life did I get a dollar out of it for services. The balance of the time it was done without cost to the company. THE KANSAS PACIFIC AND DENVER PACIFIC ROADS IN POOR OEDBB. By the Chairman: Q. As president of the Union Pacific, when the question of coiisolidar tiou was brought up in the court did you pass over the Kansas Pacific and the Denver Pacific roads! — A. I did, often. Q. About that time in what condition did you find the roads!— A. I did not find the Kansas Pacific in very good order ; rather poor order; not so good as the Union Pacific. Q. What was the condition of the Denver Pacific! — A. That was very poor; rather poor. ADVANTAGES TO UNION PACIFIC OF CONSOLIDATION. Q. In the board meetings what direction did the discussions takeM to the advantages to the Union Pacific of this consolidation !— A. It wa« this : According to the acts of Cougress, any Pacific road had a rightto prorate or tap, or get over its neighbor. The Kansas Pacific came to Denver, and the link which we have not discussed here was owned p^ sonally by some individuids. The directors of i he Kansas Pacific bOQgb^ the stock to control it, and claimed it was a part and parcel of ttieEl^ sas Pacific, and they were knocking at ourdoorevery day togetiai*^ go over our road. It was before Congress. I went myself to the Ml* mittee in Congress and combated it. They wanted us to prorate; ^'^ we could not 2)rorate. Iwas the only o\\^ •, 1 ^^^ ^lotiA thecei IM* SIDNEY DILLON. 211 had their ooonseL I do not kuow but our friend Mr. Holmes was against me at that time. Mr. Holmes. Yes, sir. EFFORTS OF KANSAS PAOIFIG TO PBOBATE. The Witness. I made one or two remarks before the committee. I said, '^They want to go over oar road^ where it is ap hill and down, and they want to prorate. The rest of our road is level. If 1 have got a heavy load of stnff, hauling with a horse team, on a level, I always have to pat on a doable team on the hills, and should we not be paid tor it f '' The committee dismissed it, and said, ^' You must fix that yourself." The reason I wanted that road was because they were knocking at the door and they would have been let in, and it would almost have de- stroyed the Union Pacific at that time to let them in, as I thought. That was my idea. UNION PAOIFIO LIKE A TREE WITHOUT BRANCHES. Ifow, 80 flEir as the branch lines are concerned, I think there was not a single mile before I was elected president. I saw the Chicago, Burling- ton and Quinoy with its Burlington and Missouri going up into that coun- try. I saw the other roads approach that country, and I said to our board of directors, ** We, on the Union Pacific, are like an apple tree without a hmb; unless we have branches there will be no fruit. We must build branch roads." They said Congress would not let us build them ; that is to say, it was against the act of Congress to build them. I said, ^^ We eannot stand here and starve if it is or if it is not." That is what I said. And I said, *^I am in favor of building them." The men who made that act could not foresee all. If they were to make it to-day they would say, "Build your branches" — that is what I said — "and wo will take the consequences." I say to-day if there are any conse- qaences about it I am the father of that trouble. To-day if those branches were not built the Onion Pacific would go into the hands of a receiver within a few years, and it may yet, 1 do not know. But those are facts about the Union Pacific. I had that Oregon Short Line built, which is 600 miles long. I gave it that name myself at Omaha, and created it and fi:x^d it up at that time, and telegraphed to Boston that witli their concurrence we would build that road. It was built. It is the great arm of the Union Pacific today, and without it where would we wf We would be nowhere. We had consolidated, you may call it; we have leased the Oregon Eailroad and Navigation Company's loed to the Pacific coast now. THE OBEGON NAVIGATION LEASE. Commissioner Andebson. The Oregon Navigation Y The Witness. Yes, sir; and they wanted in Boston — they thought of having the Union Pacific do it. I said ** no." Mr. Holmes. The Northern Pacific, you mean. The Witness. I said, ^^ These gentlemen are going around just about this time, and it is no time for the Union Pacific to do it, but let the Oregon Short Line do it. It is an arm of the Union Pacific. It is one of the arteries for its blood, and unless that very line is taken care of and Bapported by the Union Pacific the Union Pacific is of no euecooLiiti) hjBleaaed now, at the present time } it is leased by tYv^ Ote\sj(m^ 212 U. S. PACIFIC RAILWAY COMMISSION. Line, and the Union Pacific cannot afford to let the Oregon Short Line go. Commissioner Littler. For what length of time? The Witness. I guess for all time. Mr. Holmes. Ninety -nine years. BRANCHES BUILT TO SUPPORT UNION PACIFIO. The Witness. Another thing, which you can see was my object. I saw the owners of the Central Pacific making its Southern Pacific and its Southwestern Pacific aud every other Pacific around this way, I saw in a little time that the Central Pacific would have no bnsiness compared to what it had at that time, and I made up my mind, aud told our board of directors, ^^ 1 want to support this Union Pacific in such a way that if they shut down the gate at Ogden, and the traffic all goes around the other way, we can stand it." I think it is so to-day, because very little, comparatively, goes our way. If it does it is at smaU cost-. That was my idea. I preesed forward those branch lines. E ran this road in debt to the time of $8,000,000, and those very branch lines are the ones which are now giving the company betwixt $2,000,000 and $3,000,000 on the load, besides what it is doing otherwise to it. Those are facts. And I feel proud of it. I feel proud that we have got those branches, and I think the Government ought to be proud that the Union Pabific ha^ got them instead of we directors having the stock or the cost of them in our pockets. We could have bad that stock in our pockets, and had our, perhaps, hundreds of millions of dollars, but we did not do it Not a farthing has ever been received by the Union Pacific directors. It has gone into the lap of the Union Pacific. ^^THE UNION PACIFIC WAS MY PET.'' I say to-day that the Union Pacific was my pet, and whatever was done on that road was done the same as it I had owned it. Whatever was done for the benefit of the stock was done for the benefit of the Government, because it* it was strong on one side, it was strong on the other. That was my feeling for the Union Pacific. And when I lost my poor wife, and was broken up and resigned, and President Adams was put in, they had money enough to pay everything off. PAYMENT OF FLOATING DEBT CONDEMNED. There was one road we got — the Saint Joseph and Denver. We got $4,000,000 out of it. We had been picking that up with some of that same stock, or the avails of that stock, and i)icked up the securities, and we got them, and they are in the treasury ; and since I resigned $4,000,000 and over has gone to help pay off the $8,000,000 floatm debt. Bad I remained i)resident I would not have paid off that debt- There is where 1 say our conjpany has done wrong. I am speakiuji^ no of it as a financial matter. If they had taken $4,000,000 of that monej and paid $4,000,000 of the debt, and put the other four or five millioi into branch roads, when steel rails were $23 or $24 a ton, the first yeiu-3r after I resigned, we would have had four or five hundred miles of rail- road in our lap out in that country , which to-day would almost pay ilm^ dividends of the comiiany. Instead of that, we must pay off the fkMLt* inC\^i5*3fli%*«* SIDNEY DILLON. 215 compamesy bat also of sabmitting a proposition looking to the settle- ment of these difficolties. The Witness. I know they are. Commissioner Littler. Have yon any plan to snbmit for our con- sideration t The Witness. I could give you apian, if you will accept it when you get ready for it. Commissioner Littler. I direct your attention to that subject, and we may recall you. The Witness. I would give you a plan — my own simple plan ; and fhftt would be to pay when I agreed to. Commissioner Anderson. To pay in 1897 f All your people admit that it is impossible to pay the principal an I interest in 1897. The Witness. I have just said I wantet»rv Wbs^I wantyoa gentlemen to see is this : l^omattox 'W>' 216 U. S. PACIFIC RAILWAY COMMISSIOK. too inucU for it or too little — I say we did not pay too much— we took it becaase we considered it oar interest to do 8o. I had a great deal more in Union Pacilic than I had in the Kansas Paoiiic. I had between 30,000 and 40,000 shares in the Union Pacific, and I waB not sacriftcing the Union Pacific at the time we made the consolidation. It was for. the beoefitof the Union Pacific, and it got rid of competition. OBJECT OP THE POOL. Commissioner Littles. Looking to that end, you commenced your ar- rangement in 1878 with the agreement ! The Witness. We commenced our arrangement some time ahead; I do not know when. The roads used to fight about these different things, and we said, ^^ Oan not we bring this thing in in some shape or another P It looked so very bad ; it was a long time before we conld make up oar minds what we could do. Commissioner Littler. Did the Union Pacific have the consolidation in view when they made the arrangements in 1878 that you call the pool? The Witness. Oh, yes ; some of the officers of the Union Pacific felt that that was the best thing to do. Commissioner Littler. It was looking forward to consolidation that you then entered into that arrangement ? The Witness. Certainly it was ; there was the leading point. Mr. Holmes. Unity of management would be abetter term than "con- solidation," for I think consolidation under the statutes at that time bad never been talked about. Commissioner Littler. Under the act of 1874 you were bound to af- ford equal facilities to all the connecting lines ? The Witness. Yes, sir. Commissioner Littler. Why would not that have accomplished tiie purposes as well as the subsequent consolidation f KANSAS pacific's CLAIM TO PRORATE. The Witness. My dear sir, the Kansas Paciflc would have been co'^* ering about half ot our road. Tlie Kansas Pacific claimed that thej could go right over our road, if the}' pleased, to Ogdon — not for us t^ haul their cars, but they could go right over it with their own cat*^ You understand me, with their locomotives. We could not afford to fV, low that, because it would have been a road with accidents and troulr all the time. Commissioner Littler. Under what statute did they make snch claim as that ? Mr. Holmes. The fifteenth section of the act of 18G4. The Witness. We were in a very invkward position, and I could it, and *' any port in a storm," and we had to take that port, and took it, and it was a {rood thing for us to do it. The Chairman. Even although it turned out to be a burden ? The Witness. It is not a burden. The Chairman. If it should have turned out to be a burden ! The Witness. Yes, sir. If I had known it to be a burden it wou-^ have been a greater burden to have an opposition road. Some of C^ other roads in the East here would have had it if we had not taken The result is now, here arc some of these very poor roads that yoa v^ ^ go over that I bought. I bought them to keep them away from t^^' J)enver and Rio Grande. That \» to way, we could do nothing wi^^ »f. They bankrupted themselves, auv\\v\\\\o^X.\^v\\iVx\v^\fc\\v^\^ 8n>N£T DILLON. 217 ing these things which, at that time, were prosperoas, because there was a great deal of mineral in that conntry. We bought some of those roads which Mr. Adams told yon about. They were bought to keep them away from other folks and to get oar part of the business. There is the Nevada road, away up on the Central Pacific, You will say, ''What under heavens did you buy that for !^ I know what I bought it for. I was mistaken. Every one is mistaken some time. The Denver and Bio &raade people had a corps of twenty-five engineers in the Salt Lake Valley, in their prosperous times, surveying across, aud they were going to make a connection from their road to a connection with the Central Pacific at that point and cut us off. I wasinduced to buy itto keep it out oftheir hands, whether it was good for anything or not. It paid its way for a while, but raining stopped. But the great point Imake is, take the whole bundle of Union Pacific branches to-day, there is from two to three millioa dollars of advantage to the Union Pacific road, and it will in- crease. Oommissioner Littler. How many branches are there ? Commissioner Anderson. Twenty-nine, I think. The Witness. Yes, sir. If I could have got my board of directors up to the point, I would have made a better showing, and I would hftTenm in debt. I always will run in debt, if I can make money by it I do not say this for any buncombe, but it is just as I feel as to the whole thing. I have got a great interest in the Union Pacific. There is bat one man who owns more in it to-day than I do. I am not afraid of it, and I am not afraid of the Government, either one ; not a bit. THE ^DIVIDUAL INTERESTS IN THE POOL PASSED TO UNION PACIFIC. The Chairman. Had Mr. Gould or Mr. Ames or the other directors of the Union Pacific an individual interest in the pool or agreement of April, 1878 1 The Witness. What do you mean ! The Chairjian. An individual interest outside of the Union Pacific interest. The Witness. It was all individual interests put into a pool. Mr. Holmes. There was no Union Pacific money in it. The Witness. It was not the Union Pacific money that bought it. By the Chairman : Q. Did this individual interest pass to the Union Pacific ! — A. It did, every dollar of it. Q. Did the individuals who went into the agreement profit by reason of its passing to the Union Pacific? — A. It made all their securities better. Mr. Gould had a large amount in the Union Pacific ; ten times, I was going to say, as much as he had in the Kansas Pacific. Mr. Ames had a very ^ge amount, he and his family ; some 40,000 shares of the stock of tfie Union Pacific. And all there was about it, tlieir intent was to protect the Union Pacific. It was not to put in their pockets as pocket money. Q. Did the individuals in the agreement profit by reason of the rise ! — A. They did. HOW raiON PACIPIO OBTAINED ITS INTEREST IN KANSAS P DENVER PACIFIC. Q. And the individuals who profited in the agreef Vmo Pacinc f—A. No- Mr,Eoij£E& Not 218 U. S. PACIFIC RAILWAY COMMISSION. The Witness. I want to get it right. Q. How and through whom did the Union Pacific get poeaession^ ot the Kansas Pacific and the short line — the Denver Pacific f — A> '^ ^\ift Denver Pacific, by its stock. Q. Through whom ! — A. Through the officers. Q. What officers I — A. The president. Q. Then the Union Pacific, through these individaal interests, b^^ad secured control of the Kansas Pacific and the Denver Pacific, and thM en afterwards it was transferred to the Union Pacific f — ^A. I am a Uc^tie mixed up there. The Chairman. Perhaps I do not make it clear to you. The Witness. I would like to make it clear, but I want to say one word about the Oregon Short Line. Mr. Ham can give you everythia^ about that other matter. The Ghaibman. I will not ask you about the facts now. The Witness. I am like some of these other presidents — ^I do no»^ look at the books much ; I am thinking of something that is bigger thai^>^ books. THE OEEGON SHORT LINE. As to the Oregon Short Line, to show you that I wanted everythiug kept in the pocket of the Union Pacific, I conceived this idea and passed out a circular which went to every stockholder of the Union Pacific who had a right to come in and take so much of the stock and take so much of the bonds, 50 per cent, in stock and 100 per cent, in bonds. Then to the Union Pacific I said, " If you will guarantee these bonds, whether there is a cloud on them or not, and make a contract for a term of years, whereby you will protect the interest on this road and give us a pro rate or a right or interest in running over it, I will give Xsy you one half of the stock/' and that to-day is in the treasury of the Union Pacific Company. Tliac stock today is worth 30 cents on the dollar, and it is how many millions? Mr. IIoLMKS. I cannot recollect it. The Witness. It is about thirteen millions 5 that was a gift to the Union Pacific. Commissioner Anderson. What do you say that stock is worth? The Witness. Thirty cents on the dollar. Commissioner Anderson. The Oregon Short Line stock ! The Witness. Yes, sir; it is selling for that to day. I said, to pro- tect that, I did not want to let all that stock go out to the stockholders, « because that miglit be brought into another pool and sold to the North- - west or somebody else; but I said, '*Let us put that into the Union ^ Pacific box and they can afford to do something for us.'' That was my ^^ theory in that. PROFITS to ME^IBERS OF THE POOL. " By the Chairman : Ci. Can you inform me, to come back to this other question of th Kansas Pacific, whether the individual interests in the agreement o 1878 profited by reason of poysessiou of the Kansas Paoific and th Denver Pacific by the Union Pacific f — A. If I owned one huudrec: shares, or if I owned a bond of the Kansas Pacific and did not sell it or a share of stock,or an income bond, or a share of the Union Pacific and that made that stronger, I profited by it. JAliES M. HAH. 219 Q. Then the iDdiridaals profited by it t Then all the Individnals who ▼ere in the Union Pacific profited by reason of their individnal inter- ests in this agreement t— A. No, I would not say that. I would say that they did not all profit by it, because there may have been some who wonld not run that risk. Q. Bat those who remained did !— A. Those who remained if the stock went np profited, and if the bonds went up they profited the same as going into Wall street and buying. I know a good many gentlemen who went into Wall street taking their chance in buying these securi- ties and they made money by the rise. SIDNEY DILLON. The Gomuiission then adjourned to Friday, May 6, 1887, at 10 a. m. No. 10 Wall Street, New York, Friday^ May 6, 1887. The Commission met pursuant to adjournment, all the Commissioners being present. JAMES M. HAM, being duly sworn and examined, testifieefnre 1 knew anything about it. Q. How soon did you know auytbtng about it after it was for A. I could not tell exactly ; some partof the time probably dur iear. Q. Iu counectiou with what were you maile aware of its exists A. Only through attending to Mr. Dillon's business. Q. Who spoke to you about it f — A, I could not say. Q. Was it not Mr. Dillon T— A. Mr. Dillon probably gaVA n tions regarding his business. ^h THE POOL AOREEMEHT. ^^M Q. Have you overseen the original of the paper which yoa I looking at [referring to the pool agreement] !— A, I do not thini have; 1 have no recollection uf it. Q. Bave you ever seen a copy ot it^ " The WiTNKaB. Before tbisl JAMES M. HAM. 221 Oommiasioner Andbrson. Yes. The Witness. I do Dot know that I ever did. Q. Have yoa ever seen a statement of the interest of the parties named in that instrument f — A. I may have done so. Q. After seeing the exhibit of interest contained in the agreement, Exhibit No. 1, May 5, 1857, have yoa any doubt that a similar statement was shown to you f — ^A. I think probably it was. Q. What were yon requested to do in connection with that matter f ~A. I was requested to make out certificates of the interests. Q, What do you mean by " certificates of the interests " ! — A. They varesimilar to stock certificates, only each one's interest in the pool. Q. Anything elsef — ^A. I kept an account of those interests. KEPT THE POOL ACCOUNTS. Q. Yoa kept an account of all those interests f — A. Yes, sir. Q. In what kind of a book f — A. In a certificate book. Q. The certificate boo*k would not be an account, would it f — A. That is what I had. It was a certificate book. By Commissioner Littles : Q. Do yoa mean a stock-certificate book ? — A. Yes, sir ; similar to it. By Commissioner Anderson : Q. What other book did you have ! — A. That is all. Q. Where is that certificate book ! — A. I do not know where it is. Q. When did you have it last ! — A. It is a long time ago. Q. I know it is ; but when did you have it last f You may have had it yesterday. — ^A. I did not have it ^^esterday. I have not had it tor a y«ir. Q. Have you had it within two years ? — A. I do not think I have. Q. Have you had it within three years ? — A. I should think not. Q. To whom did you deliver it! — A. I think it was sent to Boston. Q. With the books of the Union Pacific Company I — A. Yes, sir. Q. By whom was it sent to Boston ? — A. I presume I sent it; I think I sent it. Q. Did you keep a letter-press copy of the letter accompanying it ? A. Vo, sir. Q. Ta whom did you address it ?— A. To the treasurer of the com- pioy. Q. Mr. Henry McFarland ! — A. Yes, sir. Q. What was this certificate book ? Was it just an ordinary stock- eertiftcate book, stating the interest of each persou, and then with a certificate torn out and a receipt in the stub! — A. Yes, sir. Q. That is all f— A. That is all. Q. How would that book inform you as to the accounts of tliis [)ool ? A. I had a memorandum of tbe amounts that each one was to be issued for,and I issued the amount to them ; but I did n(»t sign the certificates ; they were signed by the managers of the pool. Q. Who were those managers ! Tbe persons wlio were named in the paper— Mr. Villanl, Mr. Ames, and Mr. Greeley ?— A. Mr. Villard, Mr. fiage, and Mr. Dillon. THE SAINT LOUIS PARTIES BOUGHT OUT. Q. Do yon remem^ the fact that the parties who were known as Bmnt loai& pBities were bought out by the other parUeH^— J^ l^Q ^was to that 222 U. S. PACIFIC RAILWAY COMMISSIONo Q. Yon never heard anything about thatf — A. There was a general report about it. I had no know ledge— no positive kno wledge^aboat it Q. Do you know whether there was any transfer of certificates t — ^A. There were no certificates issued when they were in it. Q. When were the certificates issued f — A. I cannot remember. Q. It was aft^r they went outt — A, Yes, sir. Q. Then for the first time certificates were issued f — A. Yes, sir. Q. Then you do not think you had anything to do with the matter until after the Saint Louis people went out f — A. No, sir ; I did not. Q. The names as stated in the paper originally as the managers are Mr. Ames, Mr. Garland, aiid Mr. Henry Yillard. You say that when ' you were familiar with it the names were whatt — A. Mr. Dillon, Mr. Sa^e, and Mr. Villard. Q. Mr. Sidney Dillon, Mr. Sage, and Mr. Villard f — ^A. Yes, sir. Q. Who else, besides you, kept any account of this transaction t — A. Kobody else that I know of, unless Mr. Oalef may have done so ; and Mr. Edgertou was here at that time. Q. Do you mean to say you were the only person who had any con- nection with it that you know of, as far as keepiog the accounts are concerned ? — A. It was in the hands of Mr. Villard at one time. He had the whole charge of it, with his clerk. He managed the whole thing before I had anything to do with it. Q. After you had anything to do with it, did Mr. Villard or his clerk have anything further to do with it f — ^A. No, sir. THE POOL SECURITIES KEPT IN A TRUST COMPANY. Q. Who kept the securities ? — A. They were kept in a trust com- pany. Q. In whose name were they deposited f — A. In the name of the com- mittee. Q. Had you the power of access to the box f — A. No, sir. Q. What has become of those securities f — A. They are in the hands of Mr. Gould and Russell Sage, as trustees for the consolidated mort- gage. Q. The securities mentioned in this pool agreement, you say, are in the hands of Russell Sage and Jay Gould f — A. As trustees of the Kan- sas Pacific consolidated mortgage. • Q. How do you know they are in the hands of Jay Gould and Rus- sell Sage, as trustees! — A. That is the report of it. I cannot say that I know positively, from positive knowledge. Q. Then wh}^ did you say they were in the hands of Jay Gould and . Russell Sage, as trustees f — A. Because that is my belief. Q. That is all you mean by it ? — A. Yes, sir. WHAT HAS BECOME OF THEM? Q. Please look at the list of securities I refer to, being those stated ii the lower statement of the Exhibit B, and tell me if you know anythini about what has become of those securities f — A. What do you mean *'know''f Do you mean did I actually turn these securities over Mr. Russell Sage and Jay Gould, so as to know positively that thej went to them f Commissioner Anderson. I mean to say you have told me the]^^ were la the bands of the committee named in thSt paper, held for th^K purposes stated in that paper j thai \^, iot \\i^>a^XL^^\» ^t tlsLA parties JAMES M. HAM. yiatpool; that yoa had no access to the box in which thej were eon- taioed, bat that yoa had a general management of the accoants of the pool, or at least of the interests of the parties. ijie Witness. I kept an accoant of the parties* interests. Q. I ask yoa what has become of the securities that belonged to that pool, if yoa knowt — ^A. They were in the Union Trnst Company, and \q atom they were delivered to these trastees, as I understand. Q. Do yoa state that of your own knowledge, or because you have been 80 told f — A. I do not know how to answer you. Q. Do yon know that those certificates were delivered to the Union Trost Company f — A. I believe they were, Q. I mean the stock held, for instance, by Mr. Holmes, who is now present ; was his stock ever delivered to the Union Trust Company, or do yoa believe it was sold on account of the i>ool ! — A. The stock may have been delivered to the Trust Company ; I believe it was delivered to the T^st Company. Q. And not soldf — A. It may have been sold ; it does not appear; I never heard tiiat that was turned over to the trustees, and I do not mean to say that it was. THE BONDS DELIYEHED TO THE TRUSTEES. Q. What did you hear was ever turned over to the trustees f — ^A. The bonds. Q. What bonds T — A. These bonds mentioned in that statement here, funding bonds, unstamped income bonds, stamped income bonds, second hnd-grant bonds, Arkansas Valley bonds. Q. Was any of the Kansas Pacific stock delivered to the trustees f — A. I never heard that it was. Q. What was received in exchange for the securities which you have eDomerated as having been delivered to the trustees t — ^A. That is a matter of record in the mortgage ; I can quote from the mortgage. BBCEIVED KAJJSAS PACIFIC CONSOLIDATED BONDS IN EXCHANGE. Q. It was generally Kansas Pacific consolidated bonds t— A. Yes, dr. Q. So that the pool still held all df those securities at the time of the makinf? and issue of the consolidated mortgage t — A. Yes, sir. Q. Where were those bonds placed — the bonds that were received in exchange for those securities, I mean t — A. They were delivered to the parties in interest. Q. They were delivered to the managers of the pool, we will call itt — A Yes, sir. Q« To the committee t — A. Yes, sir. Q. And replaced in the same box where the securities had been placed before! — A. No, sir. Q. Where were they placed f — A. They were delivered to the parties in interest. Q. Do you mean to all the diflfereut parties, according to their re- spective shares t — A. Yes, sir. Q. flow did that work f— A. I did it largely. Q. How did you know how many bonds to give to one and how DMBiy bonds to give to another f— a! By the certificates that they held. Q. Were there no items of charges of expenses and changes in value \ "Jl No, sir. 224 U. ^S. PACIFIC RAILWAY COMmSSION. Q. Where are those certificates f — A. I do not know ; I have not^^:j|Q books. Q. Would not the certificates be separate from the book t — ^A. Tt^^j are with the book, I think. THE POOL STOCK DELIVEEED TO PABTIES IN INTEBEST. Q. You say that the stock was not delivered to the tmstees of the Kansas Pacific Consolidated Mortgage. What became of that stock. 1L. A. 1 think it was delivered to the parties in interest Q. Was it not taken out of the poolt — A. That would be the natoraJ result of it. Q. That would mean, then, that it was delivered back to the party who had originally put it in the pool t — A. I would not say that Q. Do you mean that it was divided among all the persons who were in the pool f — A. Yes, sir. Q. Kansas Pacific stock was ? — A. Yes, sir. Q. How did you know how much stock to give to one person andho^ much to give to another t — A. I had a list furnished to me. Q. By whom ? — A. 1 do not know who furnished it. Q. Where is that list! — A. I do not know where it is. Q. When did you last see it t — A. Not since this matter was closed up. Q. Was that agreement delivered to you by Mr. Jay Gooldt— A. -1 do not think it was. Q. How positive are you ? — A. It may have been. Q. Do you remember in whose handwriting it was t — ^A. No, sir. Q. Do you remember what the figures weret — A. No, sir. WHO GOT THE LARGEST AMOUNT. Q. Do you remember who got the majority of the Kansas Pacifi- stock f — A. No, sir ; 1 do not. Q. You do not remember that? — A. No, sir. Q. Do you not remember that one person got a great deal more tha all the others put together? — A. It may have been so. Q. Was not the large majority of the Kansas Pacific stock withdraw from that pool by Mr. Jay Gould ? — A. Perhaps it was. Q. Did you attend to Mr. Gould's aliairs as well as Mr. Sidne}' Di Ion's ? — A. No, sir. Q. Who did?— A. Mr. Morisini, I think. Q. Did you confer with Mr. Morisini ? — A. No, sir. Q. Where did the parties receive their Kansas Pacific stock f Wer you present when it was delivered to them ? — A. I do not know; I d not recollect. Q. But it was in the box with the other securities that belonged t the pool f — A. I tbink it was. It had been. Q. When did this withdrawal of Kansas Pacific stock take place f A. I cannot tell. Q. It was after you had charge ? — A. I did not manage any of thos- things. Q. But, as a matter of time, you had knowledge when it took placet A. Yes, sir. Q. You have been telling us about it ? — A. Yes, sir. Q. So that it must have been after yon had charge! — A. Undoubtedly Q. Aud it Wixs after the Saint Louis people had been bought outt JAMES M. UAH. 225 Q. And after tho Uuiou Pacific i>eople had obtaiueil coutrol ! — «!. Probably. Q. Do yoa remembcry wheu you first took charge, whether Mr. Dillon was credited with any of the Kansas Pacific stock of thi$ pool t — A. I do not remember. HOW THE VALUE WAS DETERMINED. Q. Will yon please inform the Commission how the certificates 3'ou refer to were drawn^ and what was written on them sul>stantially t — A. Substantially, it was written on them that such a person was entitled to 80 many dollars in the Kansas Pacific pool, or something of that kind. I do not recollect the title that was used for it^ bnt tho nnmber of dol- lars was stated that they were entitled to. Q. How did you arrive at the dollars f How did yon know how many dollars to write in t — A. I had a statement of each one^s interest m dol- lars. Q. Do you know how that result was reached t — A. No, sir ; I do not. Q« Yoa simply took a colnmn of fignres that were handed to you t — A. And their names ; yes, sir. Q. Did you not know that the various securities were multiplied by certain factors that had been agreed n|>ou, representing their rates of Tslae, and that all the figures were added together so as to derive the interest of each party in the pool, in dollars and cents t — A. I may have bown that. Q. Did you not know itt — A. I think 1 did ; 3'es, sir. Q. Was not that the only way it could be reasonably done? — A. Yes, sir. Q. Did you ever verify that computation t — A. I think so. Q. Was that done on a loose piece of paper or in a book t — A. On a loose piece of paper. Q. I presume — I am assuming that you have not possession of that paper.— A. No, sir. Q. These valuable things always disappear. Do you remember the figures of any of these certificates t — A. No. Q. I mean approximately. — A. I could not remember those ; no, sir, I do not Q. Did they not change from time to time ? — ^A. Yes, sir; they changed a good deal. Q. New securities were added to the pool I — A. No, sir ; there was DO change in the securities after the certificates were made. The cer- tificates remained just the same. Q. How did the certificates come to change if there were no additional wcorities! — A. They were transferred between the parties. That is nil. Q. Do you remember that the number of holders became less and less, or were the number of stockholders increased ? — A. They increased rather, if either. Q. Do you remember whether the particular holdings of any one or two individuals increased just before the consolidation? — A. No, sir; I think the whole matter was closed up before the consolidation. Q. How long before the consolidation ? — A. It must have been a year, perhaps, I should think. Q. Do yoa know when it was that these Saint Louis people were booght ontf — A. I do not recollect; I did know at the time. 16 p B 226 U. S. PACIFIC KAILWAY COMMISSIOX. now LONG THE POOL EXISTED. Q. I call your attention to the fact that the original paper is dated, i^ May^ 1878, and that the consolidation took place eighteen months af^ that. How long after you were in the management of it did yoa rem concerned with this business! It was quite a while, was it nott— Until it was closed up. Commissioner Anderson. But I am endeavoring to And out bo^ long. You say you think it was a year before the oonsolidation. / want to show you that a year before the consolidation was before you could iK>S8ibly have commenced to have anything to do with it. The Witness. Then it might not have been so long; it may ba'%*^o been only six months. Q. Do you know the date of that consolidation mortgage f — ^A. Mm^J 1, 1879. Q. So that the exchange of securities for consolidated bonds matf=^^ have taken place after May, 1879! — A. Yes, sir; that }s what made dv-^ think it wiis less than a year. ^ Q. When you refer to its being closed do you refer to the delivery the consolidated bonds to the parties in interest t — A. All the cates taken up. Q. That is what you refer to as the closing of the pool t — A. Yes, si Q. Did you take receipts for thase bonds yourself t — A. No, sir; tb surrendered their certificates and took their bonds. Q And you do not recollect making out any general statement of affairs of this pool until at its close ? — A. No, sir. Q. Or going over the figures to see whether each person got proper amount of bonds t — A. No, sir. Q. How were the fractional figures of these certificates settled for! A. They had to buy and sell to make them even. Q. Buy and sell amongst whom! — A. Between themselves. Q. Amongst the members of the ])ool ? — A. Yes, sir. Commissioner Anderson. I ask because you say that the certifica did not entitle the holder of the certificate to any bonds of the coi pany. The Witness. Tliere would be fractions, and they had to buy a sell among themselves and make it even. now UOLDERS OF CERTIFICATES OBTAINED BONDS. Q. How could the holders of the certificates get the bonds ! Descrm Ijw what Mr. Sidney Dillon, as the holder of a certificate in this pool, wo ti-lB*. certificates ! — A. Yes, sir. JAMES M. UAM. 227 Q. And tlio ft-aciioDol shares, 3'ou tbiuk, they adjusted uiuqii^ them- selves f—'^* The3' bouj^ht aud sold. Q, You have uo record whatsoever of this trausactiou in your ih)s- aessioDY— A. Only those certificates. Q. And they are not in yoor possession f — ^A. Ko, sir. Q, Yon do not know how many bonds you received in all from the Kansas City Company, the gross amoaut ?— A. It is the amount there Btated in the mortgage, Q. I say you do not know yourself how much that amount was t — A. I think it was about $3,400,000. Q. Do you mean that the securities which are enumerated in the ooDsolidated mortgage at p«ige 156 are exactly the same securities that \rere in this i>ool t — A. I should have to look at it. Q. [Handing the Book of Indentures to the witness.] Look at the foot of page 15G. Do you mean that the securities which are enumer- ated in the consolidated mortgage at page 156 are exactl^^ the same securities that .were in this pool f — A. As I recollect it, they are. Q. And the amount there given of $3,400,000 is the amount of the con • Bolidated bonds which were delivered to you and used for the adjust- ment of the pool interests ? — A. Yes, sir. Q. That, as I underatand it, includes none of the stock of the Kan- ns Pacific t — A. No, sir. Q. Af d none of the stock of the Denver Pacific! — A. No^ sir. Q. After that adjustment had been made, had you anything further to do with any of the i>arties in this pool in relation to their interests in the Kansas Pacific stock f — A. No, sir. Q. Yon kept no account of that t — A. No, sir. Q. And you know nothing about it t — ^A. No, sir. CUSTODIAN OF DENYEB PACIFIC STOCK AFTER ITS BELBASE. Q. What connection, if any, had yon with the transaction by which the Denver Pacific stock was taken out of the mortgage which you have before you and released to the Kansas Pacific Company t — A. I think I received the stock as it was delivered ; that was the first of the trans- action that 1 had to do with. Q. Yon received it from whom t — A. From the trustees of this niort- gflfife. Q. And on whose behaff did you receive it? — A. On behalf of the Kansas Pacific Kailway. Q. It was given to you, then, as the treasurer of the company f — A. Tes, sir. Q. Wheie did you receive that stock? — A. I think at 78 Broadway. Q. Which of the trustees handed it to 3'ou t — A. I do not know that the trustees personally handed it to me. Q. It was in the custody of the trustees t — A. Yes, sir. Q. And you could not receive it except by their orders ? — A. I re- ceived it by their order. I do not remember who delivered it to me. Q. You do not remember whether it was Mr. Jay Gould or Mr. Rus- sell Sage?— A. It would not be likely to be either one of them. They h«l a secretary. Mr. Calef may have done it. Q. Was he the secretary' of the trustees ? — A. Yes, sir. Q. And he would have received his instructions from them t — A. Yes, sir. Q. What did you do with tliat stock after you received itf Wb dill yoa take it, 1 mean ?— A. I kept it in the office. 228 U. S. PACIFIC RAILWAY COMMISSION. THE STOCK IN ONE CERTIFICATE. Q. Was it iu one certificate, or several t — ^A. 1 thiuk it was in one certificate. Q, Do you know in whose name it stood t — ^A. It would appear to have been in the name of Sidney Dillon, trustee. Q I know: but before you got it, while it was held by the trustees of the consolidated mortgage, in whose name did it stand f — A« I do not know whose name it was in. Q. You do not think it was in the name of Sidney Dillon T — A. I could uoL say ; I do not know. From some things that happened here yesterday I think it was in his name, but I do not know in what name it was. Q. You say Mr. Calef was the secretary for the trustees t — A. Yes, sir. Q. Did you know anything of their accounts t — A. Ho kept their ac- counts. Q. Do you remember whether that certificate, in order to pass from the trustees to the company, had to be transferred! — ^A. 1 do not think it had. Q. Do you think it was payable to bearer !— A. No, sir; but it was indorsed by the party iu whose name it was made, so that it was trans- ferable. Q. Where is that certificate! 1 mean the one that was held by the 1 rustees, and was handed to you. — A. It must be in the office of the company iu Boston. Q. Whose name, do you think, appears on the back of it! — ^A. I could not say. Q. But some name was there, so that it became negotiable ! — A. Yes, sir. WHERE IT WAS KEPT BEFORE CONVERSION INTO UNION TACIPIC. Q. You say you kept it iu the office. On what day did you receive it, with reference to the consolidation ? — A. 1 could not say. It was in the winter that the consolidation occurred. Q. Do you not associate it very closely with the consolidation in your mind? — A. I think perhaps it was very close to the consolidation. Q. You do not think it was after the consolidation ! — A. No, sir. Q. And you do not think it was before the decree in the Supreme- Court was made releasing it ? — A. No, sir. Q. So that it must, then, have been between the decree and the con- solidation f — A. Y^es, sir. Q. The decree was rendered on the 23d of January, and the consol idation was on the 24th of January. Y^ou know that? — A. Yes, sir. Q. So that it must have been received by you between these tw^ dates. IIow long did you keep it"? — A. Not very long. (i. Did you keep it half an hour? — A. Y^es, sir. Q. You are sure you kept it half an hour? — A. Yes, sir. Q. Where, exactly, did you put it after you got it? — A. In the saT^i Q. In the safe of the Kan.sas Pacilic Company ? — A In the safe us^cl in the office. ' Q. At 78 Droadway f — A. Yes, sir. Q. Who wjis in the room with you at the time, do you remember T I mean with reference to this transaction. The Witness. Who occu]^ned those offices I JAMES M. HAM. 229 Commissioner Anderson. No. Wliom did you see in tliut room about ibis Denver Pacific stock, on that day T I did not see anybo8ton office. Q- Was that the same certificate tliat you took around there wl ^^ had received from the trustees of the couHoUdatcA mi>T\\)Q\tff :i. H. PACtVIC UA'l.WAT COMMISSION h. Tlie aiiino paper I — A. TIiu NaiiK> (hiiht. @. Do you tliiiik yon h«>k it nroiind thcru tlin huihc tttiink I i]ul. Q. Yon iliiuk you took it aronttcl tlicn< tliu ia»\t iliiy ! — A. I *lo w tliiiik tliu stock wad couvurtiblu until atter tlie llrxt of lruury, [ Q. Wild receipted for wliatevor tliey gave you in oxubango for tU wirtilleatet ) The Witness. Wlio gave met I Coiuniissionvr Andekson. Tlie Union Tru»t people. Wbenyoiitoa I the certificate of Denver Pacific to tlie Union Truttt (Joiniiaiiy for « change and delivered it to tlio Union Trnst Company, 1 presume you r ceived sometbintr iu exchange for itT — A. I did not nnseivo aiiythlu| Kut then. tj. You left the Denver I'acilic atock tlici-e!— A. For transfor or ft exchange. Q, What pai>era did you nigiit — A. 1 sif^ncd tbt^ transfer-book* think: I do not recollect. Q. Do you tbiuk yon were named im the atloi-ney for trausfer oi back of the certilicate f — A. Probably, (J. Vou think you sisnod the tniuHfer-book T — A. Yes, sir. I Q, When next did vou hour of that stock, if at all 1 — A. The THE STOCK TBANSPERBED TO PARTIOULAB PKBK0N8. [ Bonn |. Did you tninHfer it in blank, or to any one In particular I- letcrred it to tbo particular persons. Do you ronieinbor wbo ihey were ! — A. No; I do not. Do you remember any of the UHine.i t— A. Homoof itto Mr. Goi« 0. About how uineh to Mr. Ouuld t — A. A eoiiaidcrable (piaiitityoi Q. How wa8 theipianliiy that he wa» togctdeturuiintMl t You didi guesa about it t — A. It was duterininecl by the twcnritie^ that Ihu h [>any received for the stock. Q. That the Kansas Paititlc Ouiupauy got for the stock f — A. Yi It was determined by his interest in tbosu fuxiuritieK A. \m, I 1-A. ^ Q. Who else had any iiiterostiu those Heouritical— A. Mr. Cliark Home interest iu them. ii. And Mr. Sidney Dillon! — A. Mr. Sidney Dillon did not deli' any secarities. (j. Not to the Kansas Pacific t — A. No, sir. t^. Or Mr. Amest — A. No, sir. (J. Do you mean to Kay that the transfer that yon efTectcd in the ofl of the Union Trust (Jompany was simply to Mr. Gould and to Mr. ('.lark A. And to Mr. Perkins ; 1 believe he bamiDi88ioner Andersox. I know: but I am now ulkiii); of iho ^odiuoperandihj which yea aDderstooiI« whenyoii tnmsforniHl this stiH'k sit t1>^ office of the UnioD Pacific Company, how many sliait^s you won^ Xq put down for Mr. Gould, and how many for Mr. i'Iark«and how many for Hr. Perk ins t The Witness. The securities that they were to nwivo won* Um^lit at a definite price, and the quantities made up enough stm^k at )iar glyen to them. Oominissioner Anderson. I understand. Rut somelnxly hml to put tbit computation down on a little piece of i^iier ! llie Witness. Yes, sir. (jommissioner Anderson. And you ha^l to have that in onler to Ih^ sore y^^ 8^^ ^^^ thing right t The Witness. I received the securities and I dolivertnl the stock. Q. Xf yon delivered ttte securities and took no niemonindum of the DOint>^ of shares, and did not figure out what they aniountetl ti\ you ^oalcl not know how many shares were to gi> to Mr. iumUK or to Mr. (jjgrk, or to Mr. Perkins, would you t— A. I do not know what you are getting at now. Conamissioner Anderson. I mean to siiy that you must have made a statement on pai)er of the relative interests of these different parties in these securities in order to ascertain how much Union Pacific stock they vere each entitled to receive. The Witness. You talk of this thing as if it was a pool. It was not. Q. I do not say it was a pool at all. We will put it this way : Have joa aoy book or memorandum showing the relative interests Mr. Jay Gonld, Mr. Perkins, Mr. Clark, and any other i>ersons, whoever they may be, bad in the stock of the Union I^acitic issued against the Denver PaiciAc stock which you can produce before usf — A. ^'o, sir. Q. Have you seen that transfer that you made at the ofliro of tlie Union Trust Company since the day you made it f — A. Xo, sir. Q. You have not examined it since yesterday t — A. No, sir. Q. Have you spoken about it to any one since yesterday f — A. No, sir. THE NEW STOCK DELIVERED NEXT DAV. Q. When was that stock actually delivered by the Union Trust Com- pany?— A. The next day after I had delivered it to them they de- livered the issue to me. Q. Xhey delivered the new stock to you ? — A. Yes, sir. Q. Did you receive it all personally ? — A. Ves, sir. Q. For whose account f — A. For the account of the persons to whom it was made out. Q. ^nd those persons were the same? Were there only those three t —A. I think not. Q. Who else was there f — A. No one else. Q. I misunderstood your answer. Now, can you recollect the num- ber of shares that were mentioned in the certificate that you received for Mr. Jay Gould t— A. No, sir. THE LARGEST CERTIFICATE WENT TO MR. GOULD. Q. Can yon recollect the fact that that was the largest certificate o^ tlie three t^A. I think that was the largest. TT. R. PACIFIC RAILWAY COHMISSION. ^^| Q. Di'< t«eiveil ftoiii thu tniBteeH uflho KansiiR I'utiiic consolidated mort also have iinotUer cortiftciite for 10,000 shares T — A. 1 thiDk so. Q. From whom ilul ,voii receive that cortifleatet — A. I do ni iitpiiibrr. I (J. In wlioup iiatno was that certillciilo t— A. I ilo uot know. L Q. WhntOiil you do with thnt wirtiflcatcl — A. That wan also : ■frrn-d at the Union Trust (Jompaiiy. P (J. Did you not receive that certificaie from Mr. Jay tiotiltl ?- do not know. Q. l>o you recollect anyho parties interested i jjoiut arranceuK'ut, or did you n'wivc twice as many f Did you re Ltwo certificates fur each party or only one T — A. I received certid for them ; thecertiUcates wen; made out in 100-share certificates ttholc quautity was made up that way. Q. "You flelivered them iu a large lot, and received them in 100- [oertiflcates 1 — A. Yea, sir, (J. Had you given those instructions to tho company to make lup in KKi-share lota f — A. That is the usual ond». (Jommissionor Littler. I^r him sejiarate the amounts. The WiTNK.ss. 1 cannot sejiarate them. They are all to«retlie«^. 15,140 Hhan's 8a In t Joseph and Western ^tiick: ^T'vi.tMW Saint JoM>p 1i and hridffe lK>nds, and 4,fK>f> shares of stock of that same "" ; *.'57iVK)0 Hastinjfs and Grand Island iKmds; *i70,0^)t) Kansas LVntRiml lK>nds; that i.s all. THE PKICES FIXED FOR THE VARIOUS 2?ECreiTIE.S. sepli and W^'sN-m sto^rk of par value of 100 ? ■ A. Ves, sir; hut it was not taken at that i»rire. <}, At what pri'!fi was it taken ? — A. It was taken at $20. (^. That w/»nld he $.';Oj,S(K) f— A. Tline hiindreil and seven thoiisaii -•^ dotla7>4. (^. ri?20 ? — A. Tweii'W^v* dofK ^ JAMES M. HAM. 235 quired in this Denver Pacific stock ? — A. Saint Joseph and Pacific bonds. Q, Have yoa a list of them t — A. I think I have a list of them. Q. Aht Is it in writing t — A. I have a pencil memorandum of them. Commissioner Andebson. We do not get beyond pencils. Please prodnoe it The Witness. I have it here. Commissioner Anderson. Will you allow me to see the memorandum t ^he witness hands the paper to Commissioner Anderson.) When was this memorandum made up ? — A. It was made up to- day. Q. From what was it made up 1 — A. From memoranda. Q. Where are the memoranda from which it was made up ? — A. It is in the office. Q. Is it on a loose piece of paper or in a book 1 — A. I think it is in a book. Q. What does that book contain ? — A. The balance-sheets of the oompany. Q. In whose handwriting is the book from which you took this mem- onndnrnt— A. In my handwriting. Q. When did yoa make up that book ? — A. That is made up at vari- ous times. Q. From what sources f — A. From balance-sheets of the company. Q. From balance sheets of the Kansas Pacific Company t— A. Of the IJoioD Pacific C'Ompany. Q. From what source do you identify and prove the fact that the bonds, of which yoa hand me a little list here, are the bonds that were originally Mr. Gould's and these other gentlemen's, and that were passed to 2ie Kansas Pacific in exchange for this Denver Pacific stock ? How [ dojoa identify those transactions? — A. Those were the amounts that I reoeived and sent to the company in Boston. Those are the securities tbati received and sent to the company in Boston. Q. When did you receive these securities? — A. I received them in Mmary, I think. 1880. Q. You received these securities in what capacity ? — A. As treasurer of the Kansas Pacific Eailway Company. Q. A.nd these are the securities against which, or the promise for the delivery of which, you delivered the Denver Pacific stock ? — A. Yes, sir. Q. With what person did you make that arrangement ? — A. I re- ceived my instructions from the president. Q. From Mr. Sidney Dillon ? — A. Yes, sir. Q. But whose securities were they largely and mostly? — A. Mr. Gould's. Q. I3id you talk with Mr. Gould about it?— A. No, sir. WHO ABBANGED THE TEBMS OF TBANSFEB ? Q. Who arranged the terms of the transfer ? — A. I do not know ; I suppose the directors did. Q. Yoa said that there was no resolution passed by the board of di- rectors on this subject? — A. I am not the secretary of the company and I do not have access to the minutes. Q. You say yon know there was no such resolution? — A. How sh 1 know of it? tr. 8. PACIFIC RAILWAY COMMISSioi^. . Why do you say now that you suppose that the directors ftc contract I — A. Because it is usual for directors to do so. j. You do uot know personally anything about it! — A. No, sir. I. IIow was the proposition determined whether the Kansas Paci s receiving an equivalent in value for the stock that it was parti th f — A. I do not know. Q. Was that a subject of discussion between anybody! — A. Not y presence. Q. All you know is that Mr. Sidney Dillon and Mr. Gould told t deliver the stock against these securities ? — A. These were my g^ ral instructions ; yes, sir. Q. And these securities were received by you at par, or bow t Principally ; some of them. THE SECURITIES ENUMERATED. Commissioner Anderson. Please enumerate the securities and tls^ir amount. — A. Que million eight hundred and thirty-three thousand clo|. lars Saint Joseph and Pacific, and Kansas and Nebraska bonds. Commissioner Littler. Let him separate the amounts. The Witness. I cannot separate them. They are all togetlior, 15,140 shares Sjiint Joseph and Western stock; $784,000 Saint Josef >/i and bridge bonds, and 4,000 shares of stock of that same company"; $375,000 Hastings and Grand Island bonds ; $479,000 Kansas Central bonds ; that is all. the prices fixed for the various seourities. Q. Was that Saint Joseph and Western stock of par value of 100?— — A. Yes, sir; but it was not taken at that price. Q. At what price was it taken I — A. It was taken at $20. Q. That would be $302,800!— A. Three hundred and seven thousaii ^* dollars. Q. Please state the prices at which these various securities wor^ taken. — A. The Saint Joseph and Pacilic bonds were taken at par; Sain Joseph bridge bonds at par, including toe stock; par for the bonds. Q. The stock went for nothing 1 — A. Yes, sir. Q. The Saint Joseph and Western was taken at $20? — A. Twentti dolhirs. Q. lIow much for the Hastings and Grand Island bonds ? — A. Those cost about $00,000. Q. IIow do you mean! — A. For the whole lot. Q. J3o you know the figure at which they wore taken!— A. No; have not got it. Q. Do you mean to say they were turned in at $00,000 f — A, Yes, si Mr. John F. Dillon. They foreclosed those tirst-mortgage bonds, ai a part of the Saint Joseph and Grand Island bonds to-day are held. Q. The $479,000 of Kansas Central bonds w(»re taken at what price ) A. 1 think they were taken at par. Q. What did that amount all foot up, at the ligares J'ou have gi^ me !— A. About $3,464,000. Q. And it was the difference between that an(,l $;5,9S(>,000 which say you retained out of the certificates that yon reccMved from the I Ji Trust Company ? — A. Yes, sir. ^Commissioner JattlFm. Will you Ivt uic liav<^ thai ])aper? Th< JAMES M. UAM. 237 Tlie Witness. I do not care to give it. (>)iniDi8Siouer Anderson. The reporters may have them from our llguies. I suppose they did not take these down. Several Newspaper liEPORTERs. We have it now. Q. Excepting the part of the stock received by yon from the Union Xnist Company, which you say yon retained, about 5,000 shares, the balance, so far as you know, was taken by Mr. Gould and the other geotlemen as owners, and used by them as owners t — A. They were taken by them, and became their property. Q. So that Mr. Dillon's statement that all that stock at first was held as treasury stock and sold by the company is erroneous ; it was a mis- take f— A. For the time being it was held in that way. Q. After it was delivered to Mr. Gould ; after that date it was not held by the company f — A. No, sir. Commissioner Anderson. The facts are — we cannot dispute about them— that thejKansas Pacific Company exchanged the Denver Pacific stock which it had for the securities which you have here enumerated and that immediately after Mr. Gould and his associates had delivered or agreed to deliver these securities they regarded themselves as the owners of so much of the Denver Piicific stock as would equal the amount agreed to be paid, $3,464,000, and after the transfer received that as their own stock f The Witness. I think that is an inference. Q. You do not think that is correct t — A. I think that is an inter- ence. Q. You do not think that is the way you would understand the trans- action, as a common-sense manf — ^A. Xo, sir. Q. Please tell us how you yourself would understand it. — A. I un-. derstand that they became the owners of the stock, and they delivered ttiese securities when they received the stock, and not until then. Q. Is not that just what I have said! — A. No, sir; I do not under- stand it so. Q. That is what I meant to say. Perhaps you have expressed it better than I did. Do you know anything else about these securities that you have enumerated, personally or as a broker? — A. Yes, sir. SAINT JOSEPH AND GRAND ISLAND RAILBOAD. Q. What do you know of the Saint Joseph and Pacific, and Kansas and l^ebraska stock t — A. I know that those certificates are all merged into the Saint Joseph and Grand luland Eailroad now. Q. Is that one railroad, or two ? — A. It was two corporations, con- solidated into the Saint Joseph and Western, of which this stock we mentioned here is the stock. Q. Was this $1,833,000 of stock or bonds ?— A. That was bonds of two corporations, which were afterwards consolidated into one corpora- tion, called the Saint Joseph and Western. Q. Where is the Saint Joseph and Western f — A. It runs from Saint Joseph to Grand Island. Q. Where is the Kansas and Nebraska! — A. It was a part of that same line. Q. And subsequently they became a part of what road f — A. After- wards the Saint Joseph and Western. Q. Where does the Saint Joseph and Western connect with the Kan- sas Paci&cf^A. It does not connect with it. f ( U. S. PACIFIC UAILW'AY COMMISSIOX. Q, Wlioro (loos it ccmuect witli tlio Uiiioii Piuilllu ! — A. ilattil. Q. Do you know auytliiug about wbetlier tbose boiiilM woru li«t«( tbo New York Stock Excbango in .lannary, 1880 1 — A. I tbiuk I were not, Q. Do you kuow wbuthcr tlioy werv comiuouly boogUt or aold in jnnrketT — A. I do not know that tbey were. Q. Do you kuow of any transactiou in thesu bonilH about tuat tl iceptiug this ouet — A. No, air. TOTAL ISSUE OP BONDS. 1 Q. Wbat was tbo total ibsuo of tbe bonds of tbe two riHulN t Wo nk(> flrat tliu 8iiint Joseph and i'aoidc InindH. — A. I tbiuk It *t 1,800,000. ( j. Wbat was tbe tot.al iHsue of tlic Kansas iiud Kebraska f— A. ^ iiiilbon uigbl liundrpd tbousand dollars. (j. Do you reoolfect, generally, whether this autii that yon have g) Hie was about evenly ilivided, or whether tboro was more of on« t of tbe other t — A. I think it was about three-lifthsaml IwollfthB. Q. Tbree-flfths of whichf— A. Of tbe Saint Joseph and Pacific. ^^^ Q. Do yon know how long Mr. Gould bad owned these sceuritieJ L Q. Or from wboui be got tbemi — A. No, sir. nds. Q. Do you kuow how many thousand dollars a mile it wuh bon for! — A. No, sir; it itt 252 miles. e»ver City roBd tunM out; whether you omitted it beoauseyou did not euro to ask it I dot know. Comniiasioner Anderson. Of course we will ask any qncstiou tl: Judge Dillon suggests that would lend to shed mom light on it: < mission is to report the facts of the vonsolidatioii aud not the ultimi result ; but as far as shedding any light is eoneenied we will take t BUggCHtioiJ. Mr. John ]'\ Dillon. Tbe iiujuiry seemed to i>oiut to the fact tit these seeurities were not worth what was paid for tliein. The CHAXitUAN. The witness can make any explanation ho de«il A. It watt a road from Hastiugs to Grand Isluud. It was virtual Ml extension of tbe Saint Joseph road to a eonucotion wilh the UdIi Paeific. Q. When were those bonds issuefl t— A. I do not kuow. Q. What is the total issue T— A. That is tho total issue. Q. This was u separate organization or eorporatiou 1 — A, Yos, «tr. Q, Do you know who was its jiresident t — A. No, air. Q. You do not know how Mr. Gould oanie to acquire title to thut^ lTo,eir. ), Do vou kuow wlietbortho coupons on tbeso bonds had been pK tMoary, 1880t— A. I think not. '^^ JAMES M. HAM. 241 Q. B&ve they been paid siDce, or do you not know ! — A. Those bonds irere d1>6orbed into the Saint Joseph and Grand Ishind Kailroad, and iioir tbey pay interest regularly. Q. JJo you know the terms of absorption I — A. At par, I think. THE KANSAS CENTRAL. Q. ^8 to the $470,000 of Kansas Central bonds ; what is the Kansas Centn^i^ — -A.. It is a road from LeavenworUi, Kans., running west. Q. I>oes itconnect with the Kansas Pacific except at Leavenworth ? — A. riiatisall. Q, Xjeavenworth, as I remember, is the end of a branch from Law- renoe f— A. Yes, sir. Q, Bow many miles long is that road ? — A. I do not recollect. Q. Do you know what the total issue of bonds is ? — A. No, sir. Q. ^re these first mortgage bonds! — A. Yes, sir. Q. Were the conpofis paid in January, 1880 ! — A. I do not know as to that. They have been paid since. Q. Are they bonds that are dealt in on the Exchange here ? — A. They have never been on the market here. Q. Poyou know anything of what their actual value was, as evi- denced by actual dealings in January, 1880 f — A. Ko, sir. Q. They were taken, I believe, at par ! — A. Yes, sir. ' Q. I have enumerated, have I not, all the securities that you have stated to me f — ^A. I think so. THK PRrVILEGE OP CROSS-EXAMINATION EXTENDED TO COUNSEL. The Chairman. Have you some explanation to make concerning the securities f Commissioner Littler. The question which Judge Dillon makes be- fore this Commission is likely to come up again during the history of it, luid I think it would be good policy to settle now whether connsel rep- lesenting these iuterest-s shall be allowed to cross-examine witnesses. For my own part, I am free to say that I am in favor of it, if they desire it Hie object of this Commission is to arrive at the very truth of tlie matter, and if counsel desire to cross-examine, so far as I am concerned Ishoold bo glad to hear them. Commissioner Anderson. As far as I am concerned, while reserving toourseivefl the inherent power of, shall wo say, shutting up the law- yers when they talk too much — which we all know is a dangerous priv- ilege—lam entirely satisfied with this understanding; that on any leaaonable occasion they shall cross-examine as much as they ple be 4,000 sliareB; yes, sir. Q. What was the total iseae of tlic stock f — A. L Nit - lares. Q, Three handled and seventy flvu tliousaiitl tlullotw rand Island bonda — what were thoiso boixla f The Witness. Can I make a sngji^-stion I • Commissioner .dJfSBBSON. "Ves. - The "WlTHBSS. Will yon not ask iiie iihoiil. ibr Q. Yes, I will ask you aboat the vulno oiiii , lytbing about the valne of that stdck in Jai.iL iDW anything about the valaeof it, Duly tli^ti : igalarly daring all the time the coia|iauy I !< i . Q. Did it pay dividends in January, 18S0, L- . I do not know as to that. Q. Yon say it paid dividends afterwanls !^ o the Union Faoifio. Q, What were the dividends T — A, I do ii ood. dividends, Q. What was the par valne; tlOOusliiir '- Q. That would be C400,000 ; do j ou k! ,^ bout T— A. No, I do not. Mr. MmE. It ran from 20 per cent, down i > THE HASTIHaS AND GRAND Q. Now, about the $37S,000of Hustings .,i> rbat was the Hastings and Grand Island ro.nd Mr. John F. Dillon. I do not know wheilii-i .unity of cross-examining; Idonotcaro to; bin low the investment in the Saint Jot'epli aiiat ; whether you omitted it because yim diil u IfDOW. Commissioner Anderson. Ofcoursi- wo \n'i Jndge Dillon suggests tbat would tend to slu -. mission is to report the facts of the couaolidatiM . result; but as far as shedding any light is cotn suggestion. Mr. John F. Dillon. The inquiry seemed Xu i these securities were not worth what was paid I'tr The Chairman. The witness can make any o\ A. It was a road from Hasriugs to Grand lulu an extension of the Saint Joseph mad to a couim Pacific Q. When were these bonds issued f — A. 1 dit .. Q. What is the total issue !— A. Tbat is tlw . JJ. Kiis was a separate organlzatiwii oi- t;*iii>ui_. JqJ. Do yon know who was its president! — A» ^ Q. You do not know how Mr. Gould cair»ft^»' A. No, sir. — >^Kv _ Q. Do yon know whether the eoupgns vczzi'^HI^ in Jannary, 1880 1— A. I think not. 7" .-^Mj I ■iIiWIM. 243 ii'iiig for the defendants id tbat Mittiiril in re^ril to the matter, Mr. 1 uveii referred to my Urm to net for -i'y which it was held uuder the ■ - 'tv Mr. Goald ! — A. I saw both of I uctinna from them, -"fter the complaint was served .' — .V. ■'•i only a day or so. It was abuiit that editioii ; -A. F i.y reason, except they wiHhe«l it done 111 HO stated to me. Doyoujirefertu .. statement! •iti can make a statement afterwanlK. :iil Mr. Oould that articles of cnnciot- . Kansas Pacific, and Denver I'acilic A. I was not .It the time the snit was brought ! — -: the time the decree was entered i — in regard to the proof to bo given .js to be released from the trnst ' — ilie valne of that security f— A. iriustbatl made. I diil niak<; 'i'l-ec, for I cross-exjimincd Mr. 242 U. S. PACIFIC RA afterwards turned out — whether t j)aiiy over and* above the prices at The Witness. The securities h; resulted in quite a handsome proi Mr. John F. Dillon. That is a Tlic Witness. And these road> acquisitions to the lines of the coi CONCERNING PBOFITS OF ■ By Commissioner Andebs^ Q. Mr. Dillon, when asked the ; or derived out of the execution o referred us to you as being able kept his accounts. Can you say Q. Vou have no memorandum have no memoranilum ; no, sir. Q. Have you any menioranduiL profits were out of the Kansas Pa Commissioner Anderson. Thi Kansas Paciiic stock to him, and Pacific Railway stock received it The Witness. I know nothing' vate affairs. Q. Have you any such memon in interest — Mr. Ames, for iustai Q. Or Mr. Dexter t— A. I did No. afteb ALMON GOODWIN, being follows : J>y Commissioner Andei Question. You are an atton Vanderi)ocl, (ireeu & Cuming, . Green, Cuming & Goodwin is i Q. At No. 2 Wall street!— poel. Green & Cuming in 1880 Q. Where was your office th in the Tribune building. We i Wall street. Q. Were you a member of t^ COUNSEL FOE TRUSTEES IN S' Q. Do you re(»^llect the suf Kansas Pacific Railroad Com] The AViTNKSS. As trusteei C'o/nmissiojjer Anderison. A, 1 do. V3ZIil3 nui _- -B3UISHT a W.-OT ITO t>J ...mbH the bet M he loM J** ^^. * * »-'""Sl"w tlifr wold do wiiffl^tijw -"l?"2ri. "£'"«»*«' "^tL ALMON GOODWIN. 243 Q. Who saw you in regard to appearing for the defendants in that gnitt— A. I think the first that I heard in regard to the matter, Mr. BoliDOStold me that the matter had been referred to my firm to act for the trustees, and spoke to me about proceedings that he desired to take, godadbeeqnently I saw the trustees, Messrs. Gould and Sage. Before lakiD^ any action, I saw the trustees. Q. Ton understood the general object of the suit was to release the Denver Pacific stock from the trust by which it was held under the terms of the mortgage t — ^A. Yes, sir. Q. Whom did you see, Mr. Sage or Mr. Gould ! — A. 1 saw both of tliem,to get my authority and instructions from them. Q. Did yon see them before or after the complaint was served f — A. ]Iy recollection is, before. Q. How long before t — A. It was only a day or so. It was about that tuue. EXPEDITION DESIRED. Q. Were yon told that the matter was desired to be conducted as promptly as x>o8siblet — A. I wa«. Q. Was any reason assigned for the necessity for expedition f —A. I do not recollect that there was any reason, except they wished it done ]iromptiy. That is. Mr. Holmes had so stated to me. Do you prefer to iii(k questions, or snail I make my statement f Q. We will ask questions, and you can make a statement afterwards. Were joa informed by Mr. Sage and Mr. Gould that articles of consol- idation between the Union Pacific, Kansas Pacific, and Denver Pacific Companies were in preparation f — ^A. I was not. Q. Were yon aware of that fact at the time the suit was brought ? — A. I was not. Q. Were you aware of that fact at the time the decree was entered ? — A. I waA not. Q. Did yon have any conversation in regard to the proof to bo given IB to the value of the security which was to be released from the trust f — A. I did not. Q. Did you make any inquiry as to the value of that security ?— A. Idonot now recollect any special inquiries that I made. I did make ioqaiiy upon the hearing before the referee, for I cross-examined Mr. Dillon at some length. HISTOBY OF THE PEOCEEDINGS. Q. What I want to get at is, whether Mr. Sage or Mr. Gould disclosed to yon at that time anything relating to the value of the securities which they were about to deliver as trustees. — A. I do not recollect es- pecially in regard to that. I think not. I will say that I am willing to state the instructions which I received from Messrs. Gould and Sage in the matter. I have asked their permission to give my instructions, so that I am relieved from the professional seal in the matter. When I lav Mr. Oould and Mr. Sage in regard to this matter, after Mr. Holmes had told me that he wished to bring such a suit, I went to them to get their instructions. I had done business before for both of them. My leeollcction is that Mr. Gould was busy at the time, and he told me gen- erally about it, and he said, '^ Talk to Mr. Sage," who was there. I did t^ with him at some length. He stated that the Kansas Pacific Oom- paoy had asked to have this stock released from the tru.st of that mort- Pffi} that he tiioagbt it was for the advantage of t\i^ to^i^\\NidX»\X^ I ■ to I 144 U. S. PACinC KAILWAY COMMIMJ^ION. lOiilil Ik) roj>orly protect 1 enbsiMiueDtly consnlted with my partupr, Mr. Vftiiderpoel, in rej to lii» opinion an to the power of the urt in the mattor, nnd uiioi I'xprcssing the opinion that it had the power, I a)>peartxl in tnu (^L'odines. Mr. [lolmes utated that they were anxious to have it ( iinmodiately, and 1 said there was no ohjoctioii, and we a^^roed iipa ref(!r<>e. I think he tttig^ested lliu name of Iloriwte M. KutfKluH, whd knew v<^ry well liy repntation and slightly purMonidly, and I said hu nntisfUctory and 1 affrt'ud to an order appointiii):; hitn referee. ' ' went before the referee upon the hearing;, ami eross-exiiiuiued lull at tionsidoritbte length in reganl to the Yaliiu of theme securities imrHuance of my inatructions, an 1 understood tliem, to see that bondholders were fully protected. When the report of the referee i Kiven, I bad no eouveritiiliun with him eseept as to what took plao( the hearing. I exainiued it nnd it seemed to me that the bondholi ■were amply proteetod, an I nnderxto'jd the matter, and i then appei court with Mr. Ilolmes, upon hia mntion, for a coDQrmatiou. THE STOCK WITHOUT VALUE AS IT STOOp. (J. What wo want to know partieularly is in reganl to the natorQ Ihe dim:lo«iirert lliat wore made to you by thene trustees in roferenot uu of I be asaetji that were being taken out of the trust. II r llin fiict that Mr. Dillon stated, in answer to yonr qt ii'iHs, ili;it lis tii:itk>rs Stood, and with this 8to(;k tied np in theXmsl suUslJiriliiilly without value I — A. I reinoraher that, in subsland L lid w r U.I Q. Do you remember the fact that he told you that if the «tOek « fitn^'.d from the trust, so that they could do certain things with i might bare a value of from $2UO,00() to $30U,00U T— A. I willnotniv hike to give the testimony from memory, as I hare not looked at it a Ion;: time. I do not remember the details of it, but 1 linvearecol lion iliat his testimony Wds that the value of the slijck was no nion any I'veut than some two or three hundred thousand dollars. Q. Tlie evidence was read hero yesterday, iind the s(ii, ciihcr while cr amlniiig him, or afterwards in mnveraation with him, ask htm n thuitccertAiD things weret — .\. 1 do not remember what I mikMl hii the oniss examination. The recurdwill show, lint I hud no talk Mr. Dillon at any time in regard to thu matter. The only eominnn Uou between Mr. Dillou and myself was what took pla<^ upon the b ' ig itself. Al'TKU UKLIUf*!! WOKTU AUOUT TRRKK MILLIONS DOIXABS. y my eonnsel. There was no suit pendtngtb^ I van on some bonda, income bomlH, which are ahead of the connotj [ Q. Can you givo us the date of llie mortgage to whlrh your conpfj taloiigodt — A. I do not know. I have got nothing really except oj pons with me. Perhaps they will tell. Uommissioncr Anderson. Do you reooginze thin mortgage, we can identify the cooponii T Mr. Mink. It is the mortgago of 1806, July I. Q. Is that the mortgage a part of whieb wan siibordi not Bulmrdinat^d I — A. Those are KulKtrdinated to the sion. Tiiut is, they art; su stamped. Mr. UOLMES. O, no, The ettami>od bomls that were subordinate the Denver extciioious wero income l>»ndN, con|)uuH. He Hiinl theywcj Denver extensions. I The Witness, No. they are subordinate. 1 made a tender of t —Penvor extension to the company, provided they would retorn thpi noritioH which they had taken (Hit. I did it through my munsel. ■ Q. What further statement do yoK want to make T — A. Ihaveotl letters here to show how they valned these. They made me at here, whtch I considered should l>e given. BoHTos, SirtcMbtrlQ,, A. S. liosKNDAitM, Emi., Keui i'ork: DkaH Sir: On tbuSrd iif tliiH nioutli 1 irrote you in rojcard tf> tbn RaniM iottomo bundit and coupons held by yoii. Asyot I have bod do aniiwnr to Ihttt miiDiaiLtiuu. It wan nut tlie iiit«iilloii to huvo tlie oBvt oontnloeil In my lattor | nuDeutly upon, and I niuNt ILFrefuro oak yon to let mo kuow At yonr uarty oonvi — « wiuitber you will Ofccpt or di'pllDo il. OAHDINER MARTIN LAXK, Jj " eally except 04J lortgoge, BO IH linated and pi I Ueiivur Kxtej Dy Commismoiicr Littlkr: Wliose letter is tliatl— \. \v\aft\«v\fe^Vi's uvAev «Ci ct>mvted. Each letter is to be on the record t n ext^iuo. AN OFFER TO SETTLE. The Witness. Here is the offer he makes : BosTOX, Septemher X l^\ jL 8. BosxNBAUX, Esq., Xew York: ])kabSir: This company has not recently parcha84Hl any Kansa.^ Paoitio incomo ^ondb or coapons. As yon doubtless know/there are now Very few of thene boiiilrt and eoopona oatstandine, and the company is under no pressure to pun^haae them. Nererthdess, in consideration of the fact that it wait your winh to m^U your Ih>iu1h to this company, when it was making extensive puivhai«es at hii;her ti^uivs than the Ink poirehaBee, we will buy your bonus from yon. If joa decide to hand your bonds to us, we will give you for them par llat. TIum k die highest price which has been paid by the Union Pacilic for Kansas Pacific in- eoaesi snd was considered by the directors at the time as too high ; we should nut flferitto you unless for the above consideration. For your coupons fh>m unstampe Is there any subject connected with the administration of the affidis of this company that you considered as impairing your scicurities in any way to which you desired to call our attention ? — ^A. In my suit ftgunst them on some $200,000 of bonds, which wa^ settled with theni fiom 95 cents to par flat, my counsel offered tbem, tlirougli me, the Denver bonds at par — I mean the Denver extension bonds. lie made a tender to them. And we also claimed that if they would return tlio stock which they took as part security on these bonds, that I wcuild give them — I made them a tender of the Kansas Pacilic Denver bonds at the prices named in the mortgage, and offered to give them income bonds alsOy provided they would put the trust fund in the same status that it was previous to this transaction. Q. What stock do you refer to now ; the Denver Pacific stock t — A. Tei sir ; I refer to about $3,000,000 of Denver Pacific stock, wb' "^ aoldf for in the neighborhood of $300,000. Q. To what fund do you mean that you claimed that stool mnmedf-^A. That traat fund. QtrJ \J. 8 PACIFIC RAILWAY COMMI8S10V. . Tlic trust ruiiil iiiKlci' llio morlfingn relntiiij; tu tlu) itit-xiiiie boD^ , Uixl^r llie iur^oiue hnnda. The incMOtti iiiul n\wi tliti KiiiiHaK Pj _pio couso^u. Q. Do you claim that tlio Deuvor Paciflcstock wan tiold by tbo t ees under tUe income Iwoda t— A. 1 do. Q. Directly ! — A. If I Iiiivc re:id tb« mortgage! riglit, I think eo. Aj 1 wrong I Mr. John R Dillon. U is a di8piit« as to wlietlier it i8 nil iiio Trom tbe wliolo rniui, or ol' tin- :ion yourcondact; did nilp any around tbe Horn T — A, Itdro^'c mo out of business, and I |fptDout.t around the Horn and stO|»pcd shipping lU'rcss. By the Chairman: _. Have you anything else to suy ! — A. Nothing thiit [ can tliliifc lave lH>eu very busy, and I wanted to bring this np vess stoa Q rat« est a noss to th w 1 liv« ALBERT S. ROSENBAUM. 249 n l^iU you be kind eDOugh to furnish us willi any papers, or letters, or cir<5*il*'', or oi-der, written or printed, that yon may have in reference to thi^ order that you speak of ! — A. There will be no difficulty in doing ^lat, s^^^ 1 v^ll agree to have affidavits drawn up that such was the i^^iffr ^^ ^^ managers and the officers of the Union Pacific road. OocKBinissioner. Anderson. We cannot take affidavits; we will have IQ ]ii^-«-^ the witnesses here. n ^Will you produce any information that you may have to the CJom- niiggiont — A. All right. By Commissioner Anderson : Q. "^^en was this circular sent to yout — A. It was sent some years ago. Q. Sow many years ago ; was it before Mr. Adams was president, or since T— A. It was before Mr. Adams was president. Q. ^^as it before the consolidation t — A. I think it was sinc^ the con- sdidAtion. • Q. Tou have been out of business ever since? — A. Since August, 188l>« I sold out ; I gave up the California business. ]tr« John F. Dillon. May I ask a question ? TUe Chairman. Certainly. rSTBR CIRCULAR ISSUED BT THE TRANS-CONTINENTAL LINES. By Mr. John F. Dillon : (^. So you recollect who issued that circular: whether it was the Union Pacific or the Central Pacific t — A. It was the Union Pacific. Q. The Central Pacific did not issue any circular! — A. The Central Pacific— it was called the Transcontinental Lines. They were all con- eemed in it. Q. It was an effort on the part of the Transcontinental Lines to pre- Teat shipments by ocean, and to compel shipments in that way across the ooontry t — ^A. Yes^ sir, they made differential rates. TO PREVENT OCEAN COMPETITION. Q. To increase its earnings f — A. I do not know anything about its earnings. It was an arbitrary and uncalled-for action on the part of a road that had been built by the public, with the moneys and lands of the United States, to compel every shipper not to ship one pound of goods, no matter how unprofitable it would be to send it across, and they coold not be sent any other way than around the Horn ; iron and iieavy freights, and everything of that kind ; and no regular shipper woold dare to ship any goods by any other line except the Transconti- ii^tal without running the risk of having differential rates put upon him. Q. You shipped some by water?— A. I did. Q* IDid you afterwards ship any by rail f — A. No, sir; I could not af- fcrd to. 1 did not dare to. Q* IDid yon offer any freight to this Transcontinental Line after you "^ shipped by water f — A. I did not, because I sold out. I was driven ont of the business. . Q. You do not know whether they would have applied the differen- Y^ rate to you or not, do yout — A. It is not a special rate to me. It 1^ a apeeial rate to the whole commerce of the Pacific. It is a well- known &ct that can be corroborated by every one engaged m wifib i U. S. PACIFIC RAILWAY COMMISSION. Dill yoii evor nffflr (Vi^iglit after yon liitd Hliip[>eil by v I did not. TUE witness' UWNEUUHir OP INCOMS BONUd. II i"" w I pass j, RUtt (J. IIuw mivuy bonds do yon stikto ttiat you biivu of those iiiooitf bondaT — A. 1 liavo 15, ■ Q. Uow luauy conpon» liavu you t — A. The exact nnmber is 8,U| nnd some dollars. Q. Have you acquired tliose since you made a sottleinont oi' tlie nib you broiigbt! — A. Yes, sir. Q. All of them! — A. Yes, air. " The Imndsf — A. The bonds. And the coupons t — A. And tlie coupons. The tlrst settlement embraced all that you hiulf — A. All Iha^ lasscascd at that time. Q. Bonds and coupons t — A. Bonds and coupons. Q. At what rate was the settlement t — A. From ninety five centa \ the bonds, flat, to a dollar. (j. Do yon recollect when this bond will mature T — A, Nineteen 1*4 dred and sixteen, I think. Q. It 19 an income bond! — A. It is a bond. ' Q. The interest payable out of income alone t — A. I HuppoMA ao. Q. When wa-1 the aettlement of this suit made t — A. I do not reiitoj her. Mr. Andrews, when was the settlement made ! j Mr. Andbews. a. I do not recoUeet the exact date, bat I tbink j in the sammer of 18!^. I think it was in Jnno. I THEIR COST. , How long bad yoit had those bonds which were ombractxl in tli. iutt t — A. I think I hi«l them seveu or eight years. Q. What did they cost you ( — A. My bonds cost me from 30 to pi [ paiomt to what poiut was this f — A. Grand Island is on llie UDion Pacific road. The promoters and getters-up and builders of these roads all failed. They all went into bankruptcy, and there was a road overgrown with grass and everything going to pieces. They dUme to me and offered an immense amount of money to furnish them with loUiD^ stock, and I was afraid of it. Q. Why were you afraid to furnish rolling stock for money f — A. Not for the amount of money, exactly. It was for me to advance the money aod take trust bond. They paid me for some receijits — I think 10 per ceatper annum on some receiver certificates issued by Mr. Dillon. Q. Was this Hastings and Grand Island a part of the Saint Joseph aod Denver scheme T — ^A. Yes, sir. That is, subsequently, after acquir- iogtfie bonds and securities of the Saint Joseph and Denver and Kansas aod ^e'braska. Q. .^fter these two were put together! — A. Yes, sir. After they got tbem into their possession, in order to make it valuable they built that extension and the bridge. The parties did. Q. VVas this road then in the hands of a receiver T — A. Yes, sir. Q. AfVho was the receiver T Th© ^Witness. Mr. Dillon was the receiver; Mr. John F. Dillon. Was it not William Bond! The "Witness. Yes, sir. lie was formerly president. Q. Xq there a map here from which you can show me where those ex- tensions were ? — A. I think it was 24 miles which they built to Grand laland. lir. John F. Dillon. It is the present line from Saint Joseph, over thiB bridge to Hastings, and from Hastings to Grand Island, on the Union Pacific. It is the present Saint Joseph and Grand Island Bail- Toad* Saint Joseph is on the Missouri side of the Missouri Eiver. That bridge crosses the Missouii Eiver and connects Saint Joseph with the road. Commissioner Littler. Where is Hastings ! Mr. John F. Dillon. That is Hastings where it ended. Now, what is called the Hastings and Girand Island road is a road 24 miles long that connects it with the Union Pacific at the town of Grand Island. SAINT JOSEPH AND GRAND ISLAND ROAD. The Witness. Wc were never able to get any interest. There never was a coupon paid of the Saint Joseph and Denver or Kansas and Ke- Inaska. Even after it came into the hands of the Union Piicific there never was anythinc^ paid, until James Benedict, the president of the Saint Joseph and (^rand Island went to work. Q. You call it the Saint Josepli and Grand Island ! — A. It is called ttow the Saint Joseph and Grand Island. The entire system ; it was for- merly the Saint Joseph and Denver, Eastern Division, Kansas and Ne- braska. 0* Its present name is Saint Joseph and Grand Island!— A. Saint Joseph and Grand Island. Q. la what year was it that the roail was in the condition you have uesjcribed it as being grown over with grass and in disuse T— A. In the "Pring and winter of 1878. In the early part of 1878. Q' Was the road subsequently taken up and deveIoi)ed before the «>n8oli(lationf-"A. No. 0* Wh;it was the condition of the road in January^ 1880 1 — A* la *8oO it had Improved considerably. 852 ir. s. PACIFIC ieah.way commi Wwitorii. Origiiinlly tliu Saint Josijeh ami Doiiver Cil^ tnatl waa boilt liy MoHHrs. Taiiiier & 0»; tlmy wure tlie>Sii)Uiciiil ageiite of Mm old SatDt JuHepli and Denver road. witness' acquisition ov tub bonds. Q. Wlieu was tbie, in 188(1, that these Tiouda were sold aL W 1 — A. In imt. Q. Are yon sure it was after the coitsolidatiou »r Iwfiire 1 — A. Thin was before the consolidation, tlie sale of thbm ttupilN. Q, The couBOlidation was in January, 1H8U T — A. Yes, sir. y. Uow long bel'oro thu eonaolidation f — A. I Wiw in Culifornu* in 1870; ill 1878 1 had «100.(H)0 of the firsta of Saint .loaepli and Denverr bonds ill my safe, and $150,000, to the best of my reoullection, of lb<^ fleconda, iiud 2,00U shares nf the stock, from a f;entlenian by thu name ofr John Uaar, upon which I had advanced him $3,000. He eamu to me ir-j tlie sprinp of 1878 nnd ofl'eied the whole of those securities if 1 woul give him t1,00U. Q. What was the par of the ttocks that yoii refer to; Iiow lua bonds t— A. $1(K),U(>U llrsts and $1'>0,000 socondR. y. And the stock wa« thrown inf — A. No; I had leut him $9,000 the whole of it. There was over 1,000 shares of Htock. KANSAS AND NEBRASKA BOAD. Q. What is the Kansas and Nebraoha road T — A. It is the weste _ extension of tlie Saint Joseph and Denver City; the old Saint Joso- aiid Denver roiul. Q. Whiit were the bonds of the Kansas nnd Nebraska worth at I same time 1 — A. They were about the same; they were a littlu low The eastern division was considered the most valuable. li. Do you know who buiit that road t — A. Tauuer & Co. were ■ tinaneial agents and promoters of the road. That caused them to f~ (J. Who was thu president of the road f — A, Iiloiiot remember n « I did not bring any memorandum with me. tj. Oiiii you state what the value of these bonds was in Junnsj 1880, just before the consolidation I — A. Not exceeding 40 cents oa dollilr. 8ATNT JOSEPH BRrDGE BONDS. Q. Now, in reganl to the Saint JoKOpii liridfie bonds: Do yoa ka anything about these f — A. That bridge was built alter the purcbaa.« _ thu minority of these bonds nnd stocks of the Saint Joseph and Dcs^ik n and the Kansas and Nebraska. It ended nowheres; nnd, in onlec i make it valnablo, this extension was built to Grand Island, and tli bridge across. That was built with moneys furnished by Mr. (ionld. ^^^n his friends. Q. Do yon know anything of the value of the bonds 1 — A. Thfiy nr —re were marketed. Q. Do you know anything of the stock of the Saint .Toscph BHdfftfT A. No ; they never were marketed. Q. It was all held by one ijcrson 1 — A. All held by one person. HASTINGS AND OKAND ISLAND KOAD. Q. What is the uttme of tbat »:Lte.i»im\ 1 — A. Tlie UfunUugm ALBERT S. BOSENBAUM. 253 Q. From what i>oint to what poiut was this f — A. Grand Ishmd is ou the Union Pacific road. The promoters and gcttcrs-iip and bailders of lAese roads all failed. They all went into bankruptcy, and there was a road, overgrown with grass and everything going to pieces. They dime to me and ofiered an immense amount of money to furnish them with rolling stock, and I was afraid of it. Q. Why were yon afraid to furnish rolling stock for money ? — A. Not for the amount of money, exactly. It was for me to advance the money and take trust bond. They paid me for some receipts — I think 10 per ceiit>. per annum on some receiver certificates issued by Mr. Dillon. Q. Was this Hastings and Grand Island a part of the Saint Joseph Aod Denver scheme T — ^A. Yes, sir. That is, subsequently, atler acquir- irkg tlie bonds and securities of the Saint Joseph and Denver and Kansas s^od Nebraska. Q. After these two were put together? — A. Yes, sir. After they got t liem into their possession, in order to make it valuable they built that e^ tension and the bridge. The parties did. C3- Was this road then in the hands of a receiver T — A. Yes, sir. <3- Who was the receiver T IThe Witness. Mr. Dillon was the receiver; 3Mr. John F. Dillon. Was it not William Bond! fXhe Witness. Yes, sir. He was formerly president. Is there a map here from which you can show mo where those ex- sions were ! — ^A. I think it was 24 miles which they built to Grand Isl Jcind. Mr. John F. Dillon. It is the present line from Saint Joseph, over tlims bridge to Hastings, and from Hastings to Grand Island, on the IT xnion Pacific. It is the present Saint Joseph and Grand Island Bail- rosul. Saint Joseph is on the Missouri side of the Missouri Eiver. That t>x*idge crosses the Missouri Eiver and connects Saint Joseph with the roaad. Commissioner Littler. Where is Hastings ! Jtfr. John F. Dillon. That is Hastings where it ended. Now, what is called the Hastings and Grand Island road is a road 24 miles long tbat connects it with the Union Pacific at the town of Grand Island. SAINT JOSEPH AND GRAND ISLAND ROAD. The Witness. We were never able to get any interest. There never ^"^as a coupon paid of the Saint Joseph and Denver or Kansas and Ke- V^raska. Even after it came into the hands of the Union Pacific there ^mever was anything paid, until James Benedict, the president of the i^mt Joseph and Crand Island went to work. Q. You call it the Saint Joseph and Grand Island? — A. It is called ^ low the Saint Joseph and Grand Island. The entire system ; it was for- ^nerly the Saint Joseph and Denver, Eastern Division, Kansas and Ne- Ijraska. Q. Its present name is Saint Joseph and Grand Island?^ A. Saint Joseph and Grand Island. Q. In what year was it that the roail was in the condition you have tlit^re wa» |>, i-liiiHi-d liy an olIlc«r of u biiitk in Wull ntreot, 1 Hiiuk, 12,000 iivre^ liviid, one ij unit vr-Noct Ion of which, i WU8 told, watt xnld for ('5{l,tH)U. in MtiiiMhhn; fabnious tbo way jiropcrty has iitcreiitteil along the U within two yeiiPH op moru. Q. Wan Mr. iiotid «l.ill in jmssesHioii uf that mad as rocuivur in Jnu tiry, llWO!— A. I vannot reniomber datex. ^TwBt KAN8AS CENTRAL KOAJ). Do jiiLi kilow anytlitiig of Ihe Kan»a« Central biindul — A. Totli (f my ri'colk'utioH, thoy vroro of no vuliii', Ntivi^r liad any valui 1 icfnwd lo liuy them, Tliey w«ro not cousidert'il of any vitlne hen and wiTi- not quoted on tlio stock exchiingo, nwitlior thu Dii»ccllaueov MlocU (-."(chiinKo nor any other exchango. tj. Do you know what that road wast — A. I do not know ; a uorl < an ahaiulom-d corduroy road. I do not know whclhor it was a narro >;ant!i> or xtaiidard, but it wa» not known tn tiuancial circles at all. tj. Where did it bt^iiint— A. I give it u|). 1 do not know. I renien bol, but I did not n"- I J. For all you know it may havo been a steel railroad, buiicrbly bill with double trackx. Do you know anything about itt — A. I i)t> nut. know nothing in its favor. I think evnrybody who deals in bonds w rtiiy tho name. (j. Can you rtifer me to luiy other i>ersonH in the city of Now Yei who arc good Judgi's of what the value of theso diflorent Bt'curit- wero la Jiinnary, IKSOT— A. Ye«, sir; John H. iliiar. (j. What is his luldresst— A. Kaven & Co., iu the Continental bah ill); on ISroiidwuy. ij. Any one I'lset — A. Yes, sir; George Arents, of Arents & You In thit Drcxi-I building. INTITBD TO JOIN A POOL. By thuCIUAlBMAN: You Ktatod that you were iuvited to go into a pool atitl lli;it ^ iclincd. What )iool was that f — A. That was a pool to sell tbe luti^ iiiid Ni'lirtiska and Saint Joseph and Denver bonds to Itlr. Gould. (J. Wlio was in that pool T — A. The direotors principatly of thttroi:a If. Of what roadt — A. The Haiut Joseph and Ucuvur" Mr. Itut worth watj the gentleman that invited me — iu the presence also of ^ guntlEsmuii I named, Mr. Uaur. ii. Do you recollect the names of the diroelorst — A. No; 1 do a The names are on reconi. By Mr, JouN F. Dillon: Q, I want to ask him a question as to daton. What was the orig i title of this ixttul you speak of between Haint Joseph aiih and Denver. Q. The Saint Joseph and Denver City ?— A. Y'es, sir ; Saint Josei)h and Denver. Q. And the pool was to sell your bonds in that ? — A. I was asked to oome in and to put my bonds in witli the rest. Q. What road issued those bonds Y The Witness. The bonds that I had f Mr. John F. Dillon. Yes, sir; the bonds that you were asked to go into a ]KX)1 and sell. The Witness. That was after the foreclosure sale. Q. Yon never had any bonds Y — A. Oh, yes; I had before the fore- dosnre sale, because I paid my assessment. Q. Yon had bonds of the original Saint Joseph iiud DenverY — A. Yes, sir. Q. Yon foreclosed that T — A. Yes, sir ; it was foreclosed. Q. That was in 1877 Y— A. I think so. Q. About 1877 Y— A. I think so. Q. Then it was reorganized Y — A. Yes, sir. Mr. Holmes. The record says 1875. • The Witness. Possibly, I cannot remember dates so well. Perhaps, if I were to look at my books I could tell you. A. Assume that it was 1875 that it was sold, do you recollect how it was reorganized Y — A. It was reorganized — 1 paid G per cent, on the bonds* for which I got stock. Q. it was reorganized into two companies T — A. Ye^^, sir. Q. I>o you recollect the names of those companies Y — A. It was the Saint Joseph and Denver City aud the Kansas and Nebraska. Q. Ajroyou not mistaken about that!— A. I may bo. 1 cannot re- member exactly. Q. Was one not known as the Saint Joseph and Pacific Y— a! Possi- bly. I think so. I think I should stand corrected there. Q. The other. Kansas and Nebraska Y — A. Yes, sir. Q. And that was done in 1876, was it not Y — A. 1870 or 1877 ; I am not sure which. Q. Ton had the bonds from the beginning in ^ . I had. U. M. PACIFIC RAILWAY COMMISSION. bavc CT16I IB the vain I iu tills goa solidatetllJ Q. Yoii ({ol Uioin on tln^rGorenmzatioal — A. No; I did uot bare CI oil l>DtU roatlH. 1 Diily bud tliuKaHtern DJvjstnii; SaiDt.Iosep)i and Den ver, Kaatern UiviHion. I uever handled iiuy bonds of the Western I>ivl< ion at all. Mr. JuUN V. DlLi.rjN. I llilnk Iho original niort^ngo was on the whol road, and yon niui^t liave got tlioiu 1 The WiTKues. I lieg panlon; no, air; I had bottdn of the Easter! Division. Cumiuissioncr Andkrsos. Tho pnictical qaestioii here is the vain of these H«euritics iu January, 1880; we are not interested iu this g lloman'H private aftairs. Mr. John F. Dillon. IIo has got the dates wrong. The Wii'NKss. I do uot pretend to be accurate al>out the d By Mr. JouN F. Dillon : Q, What becamt! of these two roadn ; wore they not t^onsolidatetl^ A. They wore consolidated under the Haitit Joseph and tirsnd Island, Q. No, were they not cotiDolidiiled under the uaiuo of the Saint J« soph and WeMtenit — A. I never olianged my bouilsi. (J. Yoa do not know about that, then f — A. I paid C per cent, ata ttiiit wart an HHsesineut alter the foreclosure, (j. What did you do with your bonds ovenlniilly f — A. I held UiQ until last fall. Q. You went into the seconil foreclosure, did you not 1 — A. Yes, i^ Q. And the company was reorganized! — A. Into the 8aiut Joti^ und Grand lslannds f — A. Yes, sir ; that was it. ^^« What action was taken in regard to the securities held under the ^^^lidated mortgage to which you desire to call our attention I — A. ^I^ I said, I do not desire to call the attention of the Commission to ^thing; I am not a volunteer witness. t}^ Commissioner Anderson : Your client has written me a letter, saying ^t he does, and has rel'erred us to you. history of rosenbaum SUIT. ^^^-l^lie Witness. There was a suit instituted by holders of consolidated :^^fl8 for the restitution of some securities that had been taken from the ^^t of that mortgage; I supnose that is what you refer to. ^ ^ommiesioner Andkmson. I suppose so; that Denver and Pacific ^H^ky I presame. 17 P B U. 8. PACIFIC RAILWAY COMMWSIOK. Tbe Witness. Yes, sir. Q, Was tbe coinplaiiitaervcdiQ tliutduir I— A. Sojtberewiis raons issued ; no complaint was served. Q, Was H complaint prepared I — A. No, sir. (J, Do you kuow anythiuff of tbe facts which resulted in the wii drawal of the IJeuvor stock from the fands which were held by !■ tmstees, of which your cliout did complain at the time t — A. The on knowledf^e I had was derived from the snbmission to me of the recoi in tbe suit instituted l}y tbe Eaunos and Pacific Oompany agaiunt tj trustees of the consolidated mortgage ; it was on that that I liaxtd ' proceedings ou behalf of my ulient. Q. Who was the attorney who brouiflit that suit T The Witness. In (tie suit brought by tbu Kunsas Paciflc Compatiyi Commissioner AndkBSON. Aguiust thulrustueal A. That is the suit that luts btten referred to hero today. Commissioner Andehson. Tliat wa« not to obtain realitution ; tJia was the suit under which the stock whs taken away. * The Witness. I say it was that record that ftirnished me the tusii of tbe pnnseuding that I did iuNtitute. Oommi^siouer Anobrsdn. The factj* you Icnow, then, are the sar facts WB knew, when we had the record liefore us t The VViTNBSs. That is all. ii. Do you know anything in a\.\\\twtvi^v*Vt'divisiftni WILLIAM BOND. 259 of tbe Saint Joseph and Denver City Railway, Eastern and Western DirisioDS. Q. What was the point of division on the roadt — A. Marysville. The Eastern Division was 112 miles, and the Western Division 115 miles. ^ 'I^AMES OF BEOBGANIZED BOADS. Q. Under what name, then, were the two divisions known after the reorganization f — A. The Eastern Division was known as the Saint Joseph and Pacific Boad. The Western Division was known as tbe Kansas and ^Nebraska road. Separate mortgages were executed on the divisions in the reorganization, and they were afterwards consolidated ooder the name of the Saint Joseph and Western. Q. Do you know the amount of the bonds that were issued on these two divisions after the reorganization! — A. One million nine hundred thoosand dollars on each division of first-mortgage bonds; $1,200,000 aeeonds on each division ; making $3,800,000 firsts, and $2,400,000 sec- onds ; 13,300,000 stock. Q. This I understand occurred in 1877 1 — A. Eighteen hundred and seventy-seven. HISTOBY OP SAINT JOSEPH AND WESTEBN. Q. Do I understand that the reorganization of the whole road as the Saint Joseph and Western occurred at the same time, or later onf — A. Later on. Q. How was that effected T^ A. The consolidation of the stock of the Kansas and Nebraska and the Saint Joseph and Pacific. Q. Did those two companies that you have named, the Saint Joseph and Pacific and the Kansas and Nebraska, have separate organizations! -A. They had. Q. And separate presidents and boards of directors f — A. The same president and separate directors, to a certain extent. Q. Who was the president t — A. I was. Q. Then when were they consolidated Y — A. I do not recollect the date. It was shortly after they were organized. It was all practically one arrangement. Q. Were they consolidated before the consolidation of the Kansas Pacific and the Union Pacific t — A. I do not know when that was. Commissioner Andebson. In January, 1880. The Witness. Yes, sir. Q. Who became the president of the Saint Joseph and Western Y — A. 1 did. Q. Who formed its board of directors t Substantially the same per- sons that were in the divisions! — A. Yes, sir; those who were in the divisions. Q. What was the next step in the history of that road! — A. The next step after what f leased to UNION PAOIPIC. Q. After the reorganization of the Saint Joseph and Western ; ^ became of the roa» yon know those bonds 1 — A. 1 have seen them. ^^_ Q. Are they gnarontced by the Uniuu Pacific t — A. The iuterest ^^L, guaranteed. ^^H Q. It ie siuce that giiurantcc that the int«rest has been iiaidN ^^^u'e^. The interest vas giiamnr^^eil l)y a trallic contract. w I ha WALUK OF BONDS OP KANSAS / Q, Did you, in 1^78 or ISlit, have any dealings in tbe bondu of I Kansas and Kobniska or the Saint Joseph and Pacilie f — A. No, ai|| had no dealings in boud» or stock, except atoek enough to qualify u director. y. Uave you any knowledge of the value of those bonds in ISTSJ A. They ranged from the time they became mei-chanlabte at all from to 40 ce»t« on the dollar. Q. Do yon remember any change in the tiitotation of those 1 ftbarlly before the eouwiltdation Iwtween the Union Paeitlc and | Kansas Pacific, which occurred in January, 1880 f — A. 1 do not ti lect any by date. I know the bonds advanced very rapidly dnring U or 1881 ; all the securities of tbe road. Q, Was Mr. Jay Gonhl a director of the roaent the whole $1,300,000, or the proceeds of the bonds and subscriptions of stock, in the construction of the bridge. There was a sinking fund that i^tired $10,000 of the bonds during the time i knew about it. Q. Was that bridge used in connection with the Saint Joseph and Denver Railroad f — A. It was indejiendent, but it was used in connec- cioD with it. Q. The trains ran across the bridge ? — A. Yes, sir; the trains starteil from Saint Joseph. Q. Was the main depot in Saint Joseph ? — A. Yes, sir. Q. Were the terminal facilities owned by the railroad in Saint Joseph f — A. They were very meager there. Their machine shops were in Elwood, Eans. Ihey had no chartered rights in Missouri. Q. When was this bridge built!— A. 1872 or 1873. Q. Was there stock of the company that built the bridge also I — A. The stock was issued for the amount of the city's subscription. The dty paid $500,000 cash as their subscription, and received $500,000 in stock of the company for the cash. . Q. What was the condition of that bridge in 1879? — A. Good condi- doD. Q. Do you know whether the interest on the bonds was regularly paid!— A. I think it was. They would n^t have applied it on the sink- ing fdnd if they had not been. There was a sinking fund upon which $16,000 had been ap])lied, or had been paid towards the sinking fund. Q. To retire what f— A. To retire the $800,000 mortgage. Q. Do you know anything about the market value of those bridge bonds iu 1879 f- -A. No, I do not. They were not on the market. Q. What rate of interest did they bear ! — A. My impression is 7 per cent; bat I will not be positive about it. Q. Did you know at that time, in 1876, that Mr. Gould held $784,000 of these bonds T — A. ]So; 1 did not. Q. You know nothing about how he got that f — A. I knew nothing about his arrangements in regard to the bridge. Q. Did you know that he held 4,000 shares of the stock f — A. It was nuDored so; but I did not know that. We had nothing to do with tb ^g^ except to pay tolls. 264 u. a PACIFIC biilwat coioiissioh. Q. Do yoa know anything aboat the yalae of the SmintJomiph bfid stock in 1879 1— A. Only what it cost the bridge compaiiy. Q. Do you know whether dividends were paid on it at that time' A. I do not think they were. HASTINGS AKD OUAND ISLAHD BOAD. Q. Was the Hastings and Orand Island end of the road built subst-w^;^ tially as the rest of the road f ^A. Yes, sir. Q. Was that constructed originally as a separate oorporatiou t f\^_ think it was. Q. Do yon remember what its account in stock and bonds was u. A. Three hundred and seventy-five thousand dollars in stoofc, and $t ^. 000 a mile in bonds, and an equivalent amount in stock. That is j^ impression about it. It was 25 miles, and $16,000 a mile in bonds. Q. When was that end of the road built t— A. In 1870. Q. By whom was it built f — ^A. By the Hastings and Grand Istaotf Bailroad Oompany. Q. Was it built after the lease to the Union Padflc was madei^i. 1 think it was; yes, sir. Yes, sir; it was. Q. It was built in connection wiUi the Union Pseiflo t— A. It was bnflt by the Saint Joseph and Denver Western road, to obtain its oim access to the Union Pacific road. Previous to that time it had to go o^er 40 mites of the Chicago, Burlington and Quinc^, or else it conld not ooa- nect with the Union Pacific. Q. Did you know at this time, in 1879, that Mr. Oould held $875,000 ] of the bonds of the Hastings and Orand Island t The Witness. They had no existence. What time do you mean t Oommissioner Andbrson. At the end of 1879. A. They were issued for building the road by the Hastings and Grand Island corporation. Q. Do you know when they were issued f — A. I do not- Q. It was built in 1879, you say t — A. That is my impression, ^y impression is, that as soou as they got possessiou of the road, iu IS 79, which is a question of* ascertaiument of dates, they immediately mA3qa& ^ontrX^ • GEORGE AEENTS, 265 Q. From your knowledge of that class of railroads, what, in your judg- iDent, would have been the fair cash cost of building that road at that time, from Hastings to Grand Island, per mile f — A. The cash cost of the railway proper would have been $10,000 to $12,000, perhaps ; but there was au extensive mileage of bridge on the Platte River to connect witb South Platte, and I do not know what that did cost. Q. You stated that you did not know whether Mr. Gould had any of those securities, or how he got them Y — A. I have no knowledge about itat all. I practically ceased to have any interest in the road after it was transferred to the Union Pacific road, although I was nominally presi- dent and director. Q. Do yon know who had the constraction contract f— A. I do not. I^ 'was built under the general direction of the superintendent of the g^iiit Joseph and Western Kailroad and the manager of the Union p^cifle road. Q. Do you know anything of the Kansas Central Bailroad ! — A. I do Q. Do you know where it is located f — A. Not precisely. Q. You know nothing about the value of its securities f — A. Ko, sir. Commissioner Anderson. That is all I want to ask you. *&e Witness. The detailed statements of the earnings and expenses ^ fbe road can be found on file in the circuit court at Topeka and 010^^ I have no doubt of the substantial accura<^y of Poor's Manual, ^liich I have examined, at page 910, of 1879. No. 10 Wall Stebet, New York, Tu^sdayj May 10, 1887. GEORGE ABENTS, being duly sworn and* examined, testified as Allows : By Commissioner Anderson : Question. What is your business ! — Answer. Broker in Wall street. Q. How long have 3'ou been in Wall street? — A. Seventeen years, about. Q. Where was your office in 1879 and 1880? — A. At No. 9 New street. Q. In what line of securities do you mostly deal ? — A. Bonds and stocks. CONCJEBNING MARKET VALUE OF WESTERN RAILROAD SECURITIES. Q. Were you familiar in 1879 and 1880 with those Western railroad bonds and stocks ! — A. Yes, sir. Q. .A^nd dealt in them occasionally ? — A. Oh ; yes, sir. Q. X>o you know the bonds of the corporation known as the Kansaj9 and N'ehraska and Saint Joseph and Pacific? — A. Yes, sir. Q. II>id you know the Saint Joseph and Pacific? — A. The Saint Joseph and Pacific t — Yes, sir ; and Kansas and Nebraska. Q. Those were divisional bonds ? — A. Divisional bonds. Q. ^nd the Saint Joseph and Western represented the whole road ? — A. They did. Q. XWd you buy and sell those bonds in 1878 and 1879 ? — A. Yes, sir. Q. Xo what extent were they dealt in in the market f — A. In 1W were all moderately dealt in. In 1879, they became more aod* Q. Were they licted on the Stock Exchange t^ A. liCo^tix. 266 U. 8. PACIFIC RAILWAY COllMISSIOlf. Q. Were yoa in the habit of examining the anotatipiui of thoae bond^.^^^ as contained in the Financial Ohroniole and other saoh papen ^ ' ^ Yes, sir. Q. Do yoa know whether those reports are sabstantially aooaiatel .^^ A. Yes : I think so. sir. Q. Will yonr books show records of transftctiona in tiieae aecnritiec^ Jl^ in 1878 and 1879 1— A. I think they wiU. Q. Can yoa famish as with the rates at whidi tfaeae aeooritiea we sold in each separate month, from the first of Jaly, 1B7& to the fliafe Febrnary, 1880 1— A. So £Eur as we dealt in them..! ooald. Bat M months we might not have had a transaction, ana in othermoafha might have dealt in thonsands of them. Q. I presnme yoa have no present recollection of the prices as _ tribated in the different months t — ^A. No, sirj not withoat reftrriagrpg to my books. I can give yoa a general idea, i think tiie bonds in lALJ ' 'is sold as low as 23 cents. Q. That is the Kansas and Nebraska, and Saint Joseph and PaoUlol A. Yes, sir; and afterwards there was a movement in them and they vanced to as high as 62 cents. There was very little difference betw the two issues. Sometimes the Saint Joseph and Padflo woold aeUB. L or 2 per cent higher than the Kansas and Nebraska, and then the Kansas and Nebraska wonld sell tiigher than the Saint Joseph Pacific: bat one is a good enide for the other. Q. When was this that they rose to 62 1— A. TUby rose to 03, if recollection is right, in 1879. I think in the fall of 1879 th^ ad^ very rapidly*. Q. Did they not get as high as 85 in November and December t— -^ Not the seconds. Commissioner Anderson. I am talking of the firsts. The Witness. The firsts never sold as low, to my recollection. P princi|>al bonds which we dealt in were the seconds, and not the firs. Q. Did you deal also in the firsts ! — A. Only to a limited extent Q. Have all the prices you have given been applicable to the Gilds? — A. All to the seconds; yes, sir. Q. Ill regard to the firsts, what is your general recollection as to th. price ill 1878 ? — A. I think they sold from about 45 in 1878 up to alx^ as high as 85 in 1879. They fluctuated with the seconds, but the trai actions were not 80 great in the firsts as they were in the seconds. Q. You have had a large experience in these transactions at the change, i presume! — A. In the Stock Exchange; yes, sir. Bat tl bonds were never on the Stock Exchange. They were looked npon what we. call an "outside" bond. Q. Do you know wuat the total issue of the firsts was t — A. I coi not give you the exact amount. I could refer to Poor's Manual thc^ Q. The total issue was $1,800,000 for each branch f— A. That is (^< rect* q! $3,000,000 for the two I— A. Yes, sir ; that is it. Q. Do you know how those bonds were held at the time ; whetlJ- '^^ they were all held in a few hands or were they generally distribated A. At first they were held in a few hands, of course, but in whose hai they were I was not familiar. Q. What do you mean by " at first "f — A. When they first came ^3^"*^ they were in a few hands, but afterwards they became scattered. Q. Do you remember what the first year was f — ^A. I think the transaction we had in the bonds was in 1878. ARTEMAS H. HOLMES. 267 Q. Can you get us what quotations you had of actual transactions, from your books f — A. I can ; yes, sir. Ck)a]ini88ioner Anderson. If you are satisfied that the quotations in theFioftQcial Chronicle are accurate, you will find them right behind joa a0^ you can quote from them. The Witness. This is 1879. Coiuinissioner Anderson. Perhaps it will save time if you will make op tho list from your books and from the Financial Chronicle, and pre- 860 1 it; to us later. A. X will do so, as far as I can. Q, In regard to other securities, do you know anything relating to the HfikStings and Orand Island bonds ? — ^A. No ; those bonds were never on tho market. Not to our knowledge. I never saw one. Q. "5Cou never dealt in those at all f — ^A. No; never dealt in them. Q. JDoyoa knowanything of the Saint Joseph Bridge bonds orstock t — A. Ihose bonds were never on the market. Q. X>o you know anything of a corporation called the Kansas Cen- tral t — A. No ; I do not. Q. TTou never dealt in those securities at all f — A. I never did. GoixBmissioner Anderson. That is all. Th^ Witness. If I send you a list will that answer f GEORGE ARENTS. Mr. Arents subse(|lieutly HubmitteriC6 paiil for tbB Dbuvbt I'aoiQo stouk T— A. No, sir ; 1 uevor kuew. Commissioner Akdebson. I tbiuk you stated 10 cents uu the dollar ns being your reoollection. Tbe W1TNE81;. That wao as bo other Rtock. I did not mean that tn lie the fact as to tbe actiuisition from Araiiahoo Oounty. I am ijiiitti sure that waH a parcel of two or three intentst^t — Colorado Central, Arapahoe County stock, and some other matters, whiub toother wnro bonf^bt for a considerable snm of money. Q. Was not the sum of money for tbe whole of it that yon hnr** stated, IJAO.wmt— A. ThatiH my reuolleetion. I donot kuow'what the nam was; 1 never knew. That was only by investigations made after the fact. Q. Did t understand yon to state in your direct examination Ibat you made personal investigation as to what hap1ied tn the purchase of some braneh rofldx! — A. Yes, sir. CONCKKNINti THE RELEASED DEMVETt PAClFrC STOCK. Q. Wlien did you make that investigation f — \, It was atxmt tfa» time ot the institution uftho Uoseubaum snit. It' 1 reeollMtt, it was^ early in IH85, and I may have made some investigation or iutiuiry \>rv — vious to tbat date, but 1 do not recollei-.t it iw U> tinir. Q. You remember wbat branch roadn you found had been pUR'hmwr^-^ with tbis s'ock ! — A. I r<^ sauit> thing a yon mean to refer to thej The Witness I presume «o, 1 remember how it looked on the pa^^ of tbe book ; there were a good many Hues of description ; 1 shouai^ think nearly a page. Kaimas Central was included. Q. Wbat book was it you saw these figures in f — A. The book In t T poHseNsion of Mr. Ham, at that time. Q. Was it a book of a corporation or a book of Mr. HonidV f — A. was not a book of Mr. (lould's. It was in thecustwly of Mr. Ham,»^ l was also an oftlcer. or connected with either the Kansas Pacific or Mz. ' Union Pacific. Q. Do you remember whether this book represented tranaaction^s. the Union Pacific or the Kansas Pacific ! — A. That book represent:...^ as I understand it, tbe transactions of the Kansas Pacific t'ompany. Q. This transaction, as you understand it, was a sale or exohungA ^ the Kansas Pacific after it had acquired the title to the ntock, ftir t securities to which yon have referred t— A, That is my recollection, whether tbe actual process of delivery took place at that time or 1ie I am not sure. I am inclined to think it must have been later, lor X ^0^ not believe the now stock certificates were ready for delivery imn* Htety at the date of the consolidation. Q. Did you ever examine to see by wbat authority of tbe Ka« PaeHie corporation that exchange waa mM\« t — A. I did not, iitsoN. Nebriiskaaud Kansas and tbe Saint Jowei^. .^^ ing as the Saint Joseph and Western. I °"i'r""» JSj hem t . ABTEMAS II. HOLMES. 269 Q. Did you ever ezamiDe to see by what authority, or by whose ac- tion^ the exact terms or rates were fixed for that exchauge by which the hoods were taken at par and at the other figures enumerated by Mr. Ham I-— A. If you will permit me to explain, I will tell you why I do not know. Judge Dillon was the senior counsel here. I was his junior. He attended to all these corporate matters himself, and 1 was not al ways CKAlled in, and in this fnstance I was not. When I made my in- vestigation it was for the purpose of acquainting myself with the rea- son, or learning fi*om Mr. Ham whether there was any reason, why wo shoold seek to defeat the Kosenbaum suit, or whether or not, when it was proper to do so, the transactions could stand the investigation of a litigation. I satisfied myself that there was no reason to be appre- hensive upon that point by the statements of Mr. llani and of others ; ^Dd wbat I looked at was simply that statement of the transaction. Q Still, you had been counsel in the suit which had resulted In taiiog from the consolidated trust, of which Mr. Gould and Mr. Sage were trustees, these $3,000,000 of the Denver Pacific stock?— A. Yes, m. Q. Tou knew that the relief in that suit had been bailed upon i)roof that the securities so withdrawn were worth in no event ovet from |200,0CK> to $300,000!— A. While remaining in the trust, yes, sir. Gomiuissioner Andbkson. No, if taken out of the trust and applied to tii6i>tirpose8 to which it was intended to ap]>ly it. The Witness. I did not know what that purpose was. Q. 7~ou knew that, if so applied, Mr. Dillon had declared that that stock could not realize over $300,000 1 — A. Yes, sir; but I did not know to wha.t^ he referred. Q. Vkke question I want to ask you is, when you found that the ac- *Uial purpose to which it had been ai>plied, and made that stock pro- dnoe ^3,400,000, did not that excite your curiosity f — A. Yes, sir; Q. Did you discuss that any with Mr. Gould or Mr. Sage ! — A. No, sir. Q. Or with Mr. Dillon t — A. No, sir; not until sometime subsequently I think the time I refer to was in 1885, when I did discuss the matter with Mr. Gould and Mr. Sage and Mr. Dillon, but only to the effect as to whether or not there was any occasion for concealment of the ac- ^nal transaction. Q. It was in 1885 that you first ascertained that this had been done, ^'S X understand it; that is, that these branch lines had been paid in ■J** exchange for the stock f — A. No; I had a general knowledge of it. j: «Uiquired it, 1 cannot tell you how; but 1 never had investigated the *^t up to that time. Q. Then when you did investigate it, you say you did have some ^^^tiversation with these gentlemen about the transaction f — A. Yes, sir; ^^ that later date. Y ^. With whom did you have that conversation! — A. With Mr. Gould. ^ tibink with Mr. Sage. I know I did with Mr. Ilani. f^. Will you tell us what you said to them I You were acting as couii- ^^l for them at the time, as 1 understand it. — A. 1 was acting for Mr. p^Ould and Mr. Sage, I think, on the occtision of the suit by Mr. Kosen- ^^^nm, based ui)on the ownership of the consolidated -mortgage bonds. <3. Were they parties personally to that suit? — A. Yes, sir. CJ. Do you know whether they have any objection to your repeating ^l^« statements you made to them in regard to this transaction as to the mver Ptfcific f — A. I have not asked them. 1 have no instmctions 270 U. S.. PACIFIC RAILWAY COMMISSION. from tbem on the subject. I prefer to be at liberty to ask them befoi answering further on that subject. Commissioner Anderson. I suppose it is proper, under the circai stances, that he should ask his client in regard to it^ without our ooi mitting ourselves to the question whether it is a privileged coinmiini< tion or not. The Chairman. Does he make that claim as a right of counsel t The Witness. I say I prefer to be at liberty to ask. The Chairman. You make that claim, of course. That is theanswi in the case. We want that information, unless you claim tliat The Witness. Yes, sir. By Commissioner Anderson : Q. What knowledge have you of those securities t Did you ever o^ ^ n any of them ? — A. No, sir ; and I have no knowledge about it, really. Q. And no knowledge of how they were acquired, or what Mr. CtotB^^S. which these roads that were claimed to be ho8tile were brought togetlK ^=^i- That is true, is it not ? — A. No, not exactly. The Chairman. Just read that petition, so tliat you can see. I C2r ^^^^ your attention to it. The Witness. What was the date of that! The Chairman. In 1878 the petition was made to the circuit coijm :»*t* The Witness. This is the original petition upon the filing of ^ ^J® bill, I take it. Q. Was not that an agreement entered into among the several r^*-*^" road companies, the Kansas Pacific and the Union Pacific and ^^^.^ (Colorado Central, for the purpose of making an arrangement by wh i^^" they could run their freight and passengers upon better terms at* *^ l)rices? — A. My recollection is— I do not connect this in point of tiM^^^^ for I do not see the date to the petition The Chairman. 1 call your attention to the date of the decree ^^^ the court, June, 1878. That is the court clerk's certilicate to the dec :*""^^.^ of the court. Judge Foster, allirming the proceedings under the p*^*^ tion there. The Witness. Yes, sir. At that time they had to come to arrangement for the interchange of business between these compan but that was long after the foreclosure suit was begun, although it "^^^^ a proceeding in that suit. ^ , Q. Was this near about the time of the pooling agreement, to wtii5L you were a party 1 — ^A. This was just s\x\i^^c^w^v\\» \,ont had secured the purposes for which the agreement was ms^e, ,^^l)Bt was the necessity of the pool t — A. The pooling agreement came ^^^t, and then the Union Pacific party, who were also the Colorado ^;^iitral party, having become largely interested in the securities of the ^^Bsas Pacific road, were willing to take off the embargo that existed ^l>on the interchange of freight. ly carried into effect ^e individual pooling agreement t — A. No, not the pooling agreement. I^bat wa^ a separate matter. Oommissioner Anderson. The desires of the party to the pool f The Witness. The desires of the parties ; yes, sir.. The agreement \)etween the managers. But the receiver, I suppose, was not to have ftoy snch authority or power to enter into any such contract or pooling agreement without the authority of the court, for they might lose money by it. It was out of that new arrangement that fiowed what I stated the other day — a complete raising of the embargo and an easy flow of boeiness in every direction, which resulted in a great increase of the business to the Kansas Pacific and increased ])rofit8, to which was added, naturally, the increase of values of these securities. By the Ghaibman : Q. Then if you had accomplished it under the proceedings of the ooort virtaally approving of it in 1878, what was the ueccHsity of the con- «|oljdation of 1880! — A. Because that agreement was terminable at any time they chose. The general manager of the Union Pacific or the Oolo- ^0 Central or the Kansas Pacific, for that matter, could have raised tbeir iii^nds, like one of those '^ walking delegates," and it would have •topped. Q. What was your moneyed interest in the pooling agreement! — A. It8tat>^ there. 1 have forgotten. My recollection is that others were '^presented by me, like an uncle, for example. Q. Oan you approximate about your total moneyed interests in the ^reenieut at the time of its formation t— A. I cannot now state it. Q Jrlow long did you hold that interest f — A. I cannot say that. Q. X>id you hold it a year or six months or three months! — A. I re- meml>er receiving, on becoming the owner of, some of the consohdated ntort^skge bonds which were the results of that ownership. Q. So that you held your interest up to the consolidation ! — A. In Becurit^ies other than stock ; yes, sir. My distinct recollection is that the Block ^as distributed out of the pool and the proportionate interests reduced. Q. What was the profit in money realized by you by reason of the change! — A. I cannot tell you now. Q. Was there any profit ! — A. Certainly. Q. Wa8itl00per'cent.or200per cent.!— A. Oh|no; Idol I . I'AVlfW RAILWAY COMMISSION 1 TUcve hutHlreil per ceut. f— A. No, sir. What was it ; 50 per eeiit, t — A, I cannot t*ll you. KANSAS PACIFIC STOCK IM THE POOL. B.v CominiBsionur AndbbhoN: Voii xay the KniiaaH Pacific stocic watt inken out of the pool. Ol . OH give UK a little more iuformatiou on Uiat — how it camo to be tftkl out of the pool autl where it went! — A. I dare aay I cau, by goll (lirougb Houie old papers in my office. Hut my best recollection is Ui it was ducideil by the partiew in interest, that iuasniaub as there w not tcoing to be a foi'eclosare, and ni?w Kansas PaciHc stock, that tl (lid Kansas Pacific stock should be withdrawn and given back to tho wlio hiid oontribuled it. »i. Mr, Gould had contrHniteil none of the Kanaas Pacific stock, ntidcrstiiiid it, in the iucoptiori f — A, I am i]nltc sure he afturwar uddtxl a very larye ino|K>rtion. Q. Oiui you cxphiiii to ua when Mr. (lonid or anybody oUu contrl ntcd additional securities to thut pool, how the accounts could bo kt bv the simple issue of the cortifieatca, iw Mr. Ham h»8 testified f — j Why, yea, air. Q. And thiit it would not be ncceaaary to keen any ledger aocoan or any eaah accounts in order to present the respective interests intl ligibly 1 — A. Nothing but a series of the old form of book-keeping (Ii>uble entry, but the common day-book form of entry. Q. Wonhl it not he necessary to keep » day-book orjonrnal in ord III enter ii nieinorandnm of what aecuritiea were reoeived from time time by llie different parties f — A, Uinioubtedty. They must have k< n list of the .-tt-cniilica lulded to the i>ool, and the uanies of tlio pArl wlio aihled lliein. Q. Do yon know whether there waa anything further tbau nn eiib made on n loose piece of paper, stating tlie amounts reecivetl. and (Ik the issue of a certilloate torn from a certiflcttte book and deiiv«n«l tlie party 1 — A. No ; I do not know. It was after I had ceased to b^ any active charge. (j. Then you never saw auy day-lxtok ur cmli-book pnrportiuff cimtaiu an account of tlll^se transttctiona, and never received any sta ment in the form of an account containing n statement bf the tmn« tions! — A. Not of the entire transactiona; I think not, I thiol niKst have received a small statement of what my proportion was Mjc distributive sbare of the consolidated mortgage Imnds. t^. Have you that statement f — A. If 1 have not, 1 have Home moo I'tiridnm of it; hut whether I have or not 1 (^^nnot any. Q. Did it purport lo l«> an extract or copy from an account in t) l»)okI— A. No! 1 think not. Q. Will yon furnish it lo the Commission f — A. 1 will endeavor to. HYPOTHESIS AS TO A LBA8E INKTISAD OF CONSOLIDATIOK. Q, In regard to thia consolidation, could not the result whioli VM a fected by the articles of consolidation have been elFeetcd e<)uallyeiul(;. *^ r making a hsiise. of which tlie rents were ei]uivaleiit to the acfiiat n ^ts of the Kansas Piiciflc and of the Denver Pacillr, to the riiion cifici — A, I think not, for the ivason that the counsel of the Uninii ■Jtlo have maintained the jiosition that it did not have Um 3 ARTEMAS H. nOLMES. 273 taaie or accept a lease to itself; and tbe same opiDion was given io re- ganl lo the charter of tlie Northern Pacific. Q, As-iuQie that that difficulty could have been obviated ; would not the result of the consolidation have been absolutely and equally well pjFectal by snclileaseas by the arrangement that was madel — A. Tlint befsttie question. I say they could not lease. The lease would be in T»[iii. Q. I beg of you to assume that some atraugementwas found to make the \easB valid ; could not the interchange of traffic and a unity of in- bTPstand of maTiagement have been arranged just as well if the Union Haoilic had been the lessee of ail those companies, agreeing to report 10 tacb company the value of its earnings as derived from its share of ilieroftdt — A. I think not. Q. Why not T — A. For the reason that any such lease con tinues only by the wishes of tbe parties ; that all lease arrangements between rail- road companies, aa a rule, are open to be rescinded by a change of man- ageaentand change of parties, or by the result of the maoagemeut h«ing more or less favorable to one than to the other, aud litigation is ilwafs open to set aside and annul such arrangements. Q. Do youuotknow that that conrse has been pursued as between the HiRMuri Pacific and the Kansas and Texas and International and Oreat HortliernT — A. In none of those instances were the Pacific railroads uialing under charter of the United States. Comuiiiisioner Andebson. 1 am only desiring to compare the fairness or tbe result of the two methods. T!ie Witness. 1 think the instances yon mention show how inopera- tice tbey are and how easy to avoid, because I think all of the roads liare become involved in litigations and receiverships, although such a Irasti uiay have beeu made with the Missouri Pacific. Q. Do you mean to say that there is any receiver of the Kansas and TeiMBl— A, I think parts of that system have been subjects of litigation. y. Was there any receiver of tbe International and Great Northern ! — A. 1 do not DOW recollect it. I think they are in default upon some of tbeir mortgage securities. Q. Vonr opinion is incorrect. But what I want to call your attention lo is, if such combined operation could be effected under lease, would not tbe result be that the general road which takes to itself the leases, KU', of the Kansas Pacific aud the Denver Pacific, would return to these nwdsjnst what they earned, under the arrangement, all friction about rights Iwiug removed? — A. That might be done, but you would have lo consider the tiuestion as to whether tUe roads would stay hitched. ^bcf might at any time avoid their hitching-strap — their lease. Commissioner Anderson. Assuming that the lease was made for 999 'ears, and the transaction was fair, and the result would be that the roads would get back just what they were entitled to get as their nst |iroportiou of the earnings, and that they would not be a burden 0 tlie lessee company. TlieWiTKESS. Yes, sir; but that is open to this ditBculty, that if the i^eed roads earned more than the lessee, and were more profitable to ^eauelves, and the lessee road was a burden to them, that would soon i avoided by tbe action of some of the parties in interest. Commissioner Andekson. As long as the lease continued it would salt in an equitable division of the profits of these roads, according tlieirreal business, obviating contests us to all questions of prorating, id not putting one road as a burden upon the other, as long us they «1> m}y reeeire what they actually earned. JSra *^- w V. S, PACIFIC KAILWAY COMMISSION. The Witness. That would be so, as long as tbo gitaation remi ju3t lliesame; but if a hostilu roail ruiiit into tbu Hamo territon crosses the lessor and lessee roatls, or interfereM in nuy wise, the a tion is not the same; and the history of all those Wostorn raitroai that their prosperity is a, vacillating ami changing i|iiiintity. Q. As a matter of fact, ia it not true that in so far as the I>Ql Pacific should not earn anythtng lieyoud tt^ operating expended tiie interest on its mortgages, the payment of dividends nu the 17 jpAcific stock, which wus the exchange for the Denver Pacitlo M Vould be a burden on the Union I'aciBcT — A. U|>on that hypoth yes, sir, Q. And the same remark applies to the Kansas PauifluT— A. Yet But there is one answer that I fhonld be i>ermitted to make to tbM Commissioner Anubbson, We will be very glad to hear it. . The Witness. That is, that the Kansas Pacific and the Dwnvei cifio were not perniittoit t« earn what they ought naturally to I earned. Q. Bat I would only call your attention to the fact that on the position I have nmde of lease contracts, whereall ditlicul ties of pron and of the accepting of through freight wonht cease, the roada wi have been free to earn jni^t what they did earn, and would so recer in rent. — A. Yes, sir; bnt that never would have taken placo witli Union and Kansas Pa<;illc, fur the reason that that was the prini contest beforiJ Congress; that we struck them before thelaborions| of their road began ; that is, we struck them in the plains; but th« ment you started westward, from there to Ogden, they went ove* mountains, through the most unprotitRble part of their district, au^ insisted that, under theactof Congress — and I still think wa were ilgj we could split it in balf, although wo went over the laborious | of the road, which was ten times more espensive to operate, man and keep up than tho eastern end was. It wonld have workeil a nnequalty to the two roads. The Kansas Pacilio would have obtai a vastly greater advantage. They were only bonded at 41fl,lW0| mile for the Govern ment lien, and for the first {irior liens, whereaSj Union Pacific was bonded at the raio of |16,U00, t24,*\. nto^ Wi v U. 8. PACIFIC BAILWAV COMMISSION. Mio lowest 20A; for May, tbe liigtiest was 59| aail tin; lo#eittCO; f^ Jitiic, the Uigliest was 50 and the lowest 54 ; lor July, tlin lijgliest w^ e, uimn the (int>ation of t>ro- nitee or adjustments, did yon not ! —A. Yes, sir. Q. Have you a copy of hiat 1 — A, I hiive one, bound, that was niaclo. The CnAiBMAN. The one I reftT to was along about 1877. The Witness. I think 1 have that; bnt I rememberseeing theotberJ a brief or argument I made before Mr. Schnrz, who was theu thoSMr«. tary of the Interior, or Charles Devens, who was Attorney-General, have forgotten which. . Q. Will yon furnish the Commission with itt — A. I have only on tmiind eO])y. Q. We will take care of it. You did not agree with Mr. Sidney f> i Ion at that time, did yont — A. Oh, no. We were very far apart. ii: Yon were on diflerent sides at that time ! — A. Yes, sir. The CnAlBHAN. If you could furnish us with a ropy we wonld like have it. The Witness. I have no objection whatever to your using it. AUTEMAS JI. IK)I-ME&- ,^ atiB UmnatBWBi thea Bc^joTirncd to WedneBday, May U, lt>6J,it ^ ADDISON CAMMACK. 277 No. 10 Wall Street, New York, Wednesdiiy^ May 11, 1887. The Commission met pursuaDt to adjournment, all tbe Commissioners \msLg present. ADDISON CAMMACK, being dnly sworn and examined, testified £M follows: By Commissioner Anderson : Qaestion. Where do you reside t — Answer. In New York. Q. What is your occupation f — A. Stock business, Stock Exchange. DIRECTOR OF KANSAS PACIFIO AND UNION PACIFIC. Q. Were you, in January, 1880, a director of the Kansas Pacific f — A. I was a director, I guess, about that time, but I have not thought of it in BO long a time that I could not tell you the exact date. Q. You remember you were a director at the time of the consolida- tion f — ^A. Yes, sir. Q. How long had you been a director t — A. Just that year; that was all. Q. Just for that year t — A. That was all. Q. How did you come to be elected as a director of that road, do you remember t — A. Just before the election of the Union Pacific Railroad, A party of us bought a large amount of Union Pacific stock from Mr. C^ould, and the syndicate that bought the stock made a bargain that two of their members should become members of this road and of the Kansas Pacific. This is my recollection of the transaction. And I and snother gentleman — D?ho it was I have forgotten now — were selected to represent this syndicate in the board of direction. Q. In the board of direction of the Kansas Pacific ! — A. No, of the ^i^on Pacific. I do not know about the Kansas Pacific ; I do not re- ^^mber. Q. You say you and another gentleman were elected to represent a syndicate in the Union Pacific T — A. Yes, sir. fj. Were you a director of the Union Pacific ! — A. I was; yes, sir. Q. Not at the time of the consolidation f — A. I think so. Commissioner Anderson. It is the time of the consolidation we are ^I^^aking oL T?he Witness. Yes, sir. IJommissioner Anderson. The essential point is, that you were a director of the Kansas Pacific at the time of the consolidation f The Witness. Yes, sir; that is my remembrance. the occasion of the consolidation. ^ Q. Do you remember the occasion of the consolidation ?— A. Yes, Q. Were you in New York on that day t — A. I was present at the *^ meting. Q. At what meeting t — A. At the meeting consolidating the two ^^^^mpanies. Q. At the meeting of what board, of what company ? — A. I thiuk it "^^as the Union Pacific. Mr, John F. Dillon. The record says that he was a member of the ^H)w4 of dbectioQ of the Kansas Pacific, and not of the Union Paci0^ 1U1 i 1 V. 8. rACII'lC RAILWAY i:OMMIt%t410N. ^^^H ComiiiisHianvr A»DKltso». Ho vtas iu botli buiiiils. The gentlei 18 right. TUe Witness: That is iii,v incmorv. Q. While we are on this siibjecti who was th« other geiitlfiiuui w joined you oil the Union Pacific boaril to reproseut Mr. Goold, op repreiseiit the sjmiicnte! — A. We iliti not represent Mr. Gouhl; 1 represented the s.vnUicate. Q. Will you look over the iiameBau!.! answer I — A. IthasbeeiisoJol I hiive forgotten. [AlteT tuuking.] Jnme^ li. Keene. Q. You aloEie represented this isyndieate in the Kansas Pacific, or n resented that interestT — A. No. Q, Mr. Koene was there also! — A. Yes, sir: 1 did not reprctient t xyndicatti in the Kansas Pacific. We bon(;ltt the stock of the Uuii Pacific from Mr. Gould. I think iibont $7,00(1,000. 1 forget the iiiu ber of shares. I think it was 70,000 shares. We were elected dire ora in ttie railroad. Q. How would that explain your being elected a director of the K| HUH Paeiilc !— A. I pledge you my word I could not remember. Q. It wait about the same tinio that you beoamu a director iu b^ companies} — A. I think so ; yes, sir. Ij. Was it not connected with the same general sultjeot 1 — A. I tbi 80. Q. You will notice that both you and Mr. Keeno entered the direut of both companies at the sunic time ? — A. Yes, sir ; I cannot tell j about the Kansas Pacific. y. The question that I put to you is, whether it would not be t 1 hat you and Mr. Keene entered both of these boards at Ibosauiotli ■ere elected the saine time in both boards ! — A. I could not | you whether it was the Ramo day or not. I do not know, 1 wati j iruseut. 1 do not know where the election took place, Q. Do you know whether Mr. Keene had boon in the board of I hion Pacific, or of the Kansas Pacific, before you wore in tliemf— : do not think he was, but I would not on tbut subject trust my tut ry. Itiit I lliink he went into the Union Pacific at the same that I j to represt'iit the syndicate that bought the stock from Mr. (ionlil. liy thoUHAIKMAN: Q, Who eomi>o8ed the syndicate! — A. There was Mr. 1). P. Horp and Mr.iJharles J, Usboru, It was all publicly known at the time,b 1 declare 1 have forgotten. And myself and Mr. Keene. 1 havefl gotten now. It was a long time ago, audi never thought of it fbryisu By Commissioner Andeiison: Q. Iu regard to this meeting on the day that the consolidutiou ttn flee, where was that held t — A. In Broadway. Q, IJo you remember whether your notice to attend was reeeivd 1 telegraph or by a regular notice T — A. I couhl not remember. Q, You do not recollect it I — A. I could not tell you. Q. Do you remember whether the proceedings leading to the coMd idation were hurried or were they deliberate! — A. I think tliervW quite a crowd there. It took I do not know how long. Wo were tin the afternoon, if I remember right, and pretty mncli all the dimTli were there, and Judge Dillon read the document which consolidated | two roads. Q. Had youeverreadthatdocument before you gottheret — A. Nev Q, Had yon hoartl it discussed before you got there I — A> j(%> it (ho (locTinont, ADDISON CAMMACK. 279 Q. WaHituot' rather a surprise to yoaf — A. I had heard that the cousolidatiou would take place previously, but from whom I do not re- member. I had 8old out my interest in the road previous to this meet- ing— some time before— and of course when a man sells his interest he does not take Q. He does not 'take the same amount of stock in it! — A. No, sir. Q. What do you remember that did occur, as far as the Kansas Pa- c^c is concerned, on that day f — A. 1 cannot tell you now. Q. Do you remember any meeting of the board! — A. I could not tell yoa. I bad no interest in the Kansas Pacific, and I could not remem- ber. Q. Yon were a director of the E^ansas Pacific ! — ^A. I was. SAINT JOSEPH AND PACIFIC BONDS. Q. Do yon recollect any discussion at a meeting on that day, or before tb»t day, of the Kansas Pacific, in which there was talk about selling $1,8^,000 of Saint Joseph and i?acific bonds, or of the Elansas and Ne- braska bonds t — A. I never heard of that transaction until 1 saw it in tbe paper the other day. Q. Ton never heard about it at all ! — A. Never heard of it until I saw it in the paper the other day. When did that occur ! Q. You think a transaction of that magnitude, while you were a di- rector of that road, would have been discussed at any interview in your prttence without leaving a trace of it in your memory! The Witness. Which road ! Commissioner Anderson. The Kansas Pacific. A. I never heard of it until the other day. DENVER PACIFIC STOCK. Q. Do you remember that you were ever in any wise consulted in re- gard to a sale of 29^986 shares of Denver Pacific stock, which was owned by the Kansas Pacific road, to Mr. Gould ! — A. Never. I never was. I never heard of it until I saw it in the paper the other day. Was that not doue after the consolidation 1 Commissioner Anderson. 1 cannot answer your question. The Witness. I do not know, but it strikes me that it was. I was not in the board after the consolidation. Commissioner Anderson. The efiect of it as fixing the price of the Denver Pacific stock was on the 24th January. When the securities were turned over or when the resolution was passed I do not know. The Witness. When did the consolidation take place ! THE circumstances OF THE CONSOLIDATION. Q. On the 24th of January, 1880. Do you remember any resolution of the board of the Kansas Pacific approving of the consolidation ! — A. I ooold not remember that-. Q. Were you, yourself, in favor of it ! — A. I voted for it as a Union Pacific director. The other I have forgotten about. Q. You do not remember what you did as a Kansas Pacific director! •^-A. I do not. I do not remember. Q. Do yon remember that during this day there was a meeting of the bir««Iura not, generally, when tlie office ia in Boston and tbey nie«tl iu New Yq (j. Tlicu you never made, as a director, any personal iiivvetjgMi; it tnay bavebeen,bat eould not remember. IJy tlie<^HAIBMAN ; tj. Yuu did not ascertain, tbeu, wbutliLir tlie.se loails tbat you Inking into tbo Uuion Pacific had a large income, or whether tla-y vei bankrupt roads t — A. Well, I did not know much about it ADDISON OAUMACK. I as folloi Mo. 10 Wall Stbekt, New York, Wedntiday^ May 11, 1887. DIEECTOR OF THE UNION PACIFIC. By Commissioner Anderson : luestiou. Were you a director of the Union Pacilic i Irhiiik I was. THOMAS T. £GK£BT. 283 Q. At the time of the eoDSoIidation ! — A. I think I was api)ointcd eitber late iu the fall of 1879 or in 1880, bat I cannot recall definitely wbidi- Q. Tou say " appointed^ ? — A. I think I was api>ointcd to fill a va- cancy when I went into the board first Q. That is, elected by the board itself t — A. Elected by the boiinl itself; that is iny impression. Q, Bow long did yon remain a director ? — A. About two years, or until Mr. Adams was elected. I withdrew, and Mr. Adams, I think, tras appointed or elected by the board to fill my place. Mr John P. Dillon. 1884! Ito Witness. I have forgotten. Q. Where were you in January, 1880? — ^A. In New York. THE CONSOLIDATION. Q. Do^ou recollect the occasion of tho consolidation f — A. I do. Q. Were you present at the meeting T — A. I think I was. Q. Do you remember receiving a notice to attend 1 — A. I do not rec- ollect that ; I presume I did. Q. Where did you live then t — A. In New York City. Q. What part of New York City T— A. I lived at the Windsor Hotel, then. Q, Do you recollect being present at the whole of the meeting, from tiie beginning to the end of it T — A. I could not say as to that Q. Do yon remember the circumstances of the meeting at all t — A. I do. I do not think I got into the meeting for some time after it had eoQYened. Q. What do you recollect as having occtin^ed at that meeting f — ^A. B^ly, for the moment, I do not know that T can recall anything defi- nitely. There was a general conference there, an expression of opinion by different members, but I could not recall what it was. Q. Do you not recall what the general subject was that was brought npf— A. A consolidation with the Union Pacific. Q. Was it a regular meeting or a special meeting! — A. That I am not able to say. Q. Had you heard of the consolidation before ? — A. I had. Q. From whom! — A. From Mr. Fred. L. Ames. Q. Any one else! — A. Mr. Dillon. Q. Sidney Dill5n!— A. Sidney Dillon. Q. What had been said to yon relating to the consolidation gener- ally f— A. The question was as to the propriety and advisability of such amove. Q. How far did you make any examination youreelf ! — A. Not very &r. I was too ^usy a man in other directions, and wa« not able to get the other information I possibly should have had upon the subject. I might say there that I had repeatedly stated to Mr. Ames that 1 was not able to attend the meetings, and when they found a i)erson who conid give more time and do better service to the company, 1 would be glad to have my place filled. Q. State to us what examination you made, if you made any at allt— A. I did not. The only thing I knew was what was spoken of in the meeting. Q. Then iu regard to the question of the consideratiou of w^ been paid for the new stock that was to be miule, or the TH Denver Pacific Company as being able to eiiru a dlvideud W N I W L 001 k V. S. PACIFK? EAILWAV COMMISSION. for ortbti KdiisnH Pacific Oompjiny as being able to caru a dividui its stock, Ibat was not a subject that yoa oxaminul at nil I — . va>s not. Q. Did imybody vote against tbe coDsolidatiou, to y tioii ! — A. 1 do not recollect. (J. IIow did you votet — A. I tbiiik I voted for the couKoliduttoi Q. U(>on whose advice did you rely when you voted for tbe dation f — A, On Mr. Fred. L. Ames. Q. At the tiano yon sa^ you so voted were yoa a bolder of Ui Pacific stock 1 — A. Yes, sir. Q. IIow much T — A. It was not a large amount. I do not thint exceed one hundred shares. I bad more bonds Iban 1 biul of stocks Q. At tbe time jou so voted were you interested in any of tbe sot itios of the Kansas Pacific T — A. I was not. Q. Or the Denver Pacific T — A. None whatever. ii- Whatwereyoorrelalions with Mr. Ames, confidential audcloM A. They were friendly relations; always have been. Q. What were yoar relations with Mr. Gonldt — A. Pleasant friendly relations. Q. Did you see bim frequently ! — A. Very fluently. Q. As a matter of fact, did he advise yoa to vote for the consol tioni — A. He did not. ^ Q. Did yon have any talk with him on the subject! — A. I do think I had any conversation with bim on the anhject, except « might have been in tbe office, in tbe presence of Mr. Dillon and a of the directors. Q. Was Mr. Gould present at tbe meetingt — A. I am notabli slate that. Q. Was Judge Dillon present then! — A. That I am unable to sa; Q. Do you remember that the articles of consolidation were read A. I think that a paper or papers were being rea^l when I rame' tbe meeting. Q. Yon do not remember who was reading them! — A. I do not Q. Was there any discussion during the session, while yon 1 present, relating to the ctfect of tbe consolidation on the iutoreatof Ooverumenlof the United States! — A, I do not recollect any dis slon of that kind, Q. Yon gave that subject no consideration yourself! — A. I did (j. Were the Government directors present, as fac as your men serves ! — A. I do not recollect. By the Cuaikman : Q. How many meetings did you attend dnring the two years were a director t — A . I do not recollect. I wiw so thoroughly occn] that I never attended a meeting if I could get out of it. Q. But yon were a director! — A. I was a director. IJ. And had large interests at stake! — A. Not As large u i others. Q. At whose instance did you assume tbe directorship! — A. '. not think tbe matter was presented to mo until I was notified th bad been made a director. Q. Did you not regard it of importance whether the Union 1' was assuming worthless roads or valuable roads! — A. Of course,! was of importance; lint from a general view of tbe situation 1 did oouceivfl that it was taking in anything that was not valuable. Q. Then you voted upon the tact ftia\. ■sowTt^.'&TA'yi.vt.ttaavaln >ODeotjon of tbe Union Paclftcl — \. "^ea, svn. AMOS H. CALEF. 285 Q. How did yoa inform yourself t — A. As I told yoa, I got most of 1P7 ioformation from Mr. Fred. L. Ames. *Q. Toa made no personal investigation f — ^A. !N^o, sir ^ no personal investigation. Q. Bad yon discussed with Mr. Ames in 1879 the question of con- solidation f — A. I do not think I had done so. Q. The only conversation took place immediately before the consoli- ^on f— A. I think a short time before. THOS. T. EOKERT. IJo. 10 Wall Street, Wednesdayj May 11, 1887. AMOS H. OALEF, being duly sworn and examined, testified as fol- lows: By the Chairman : QueBtion. What is your business f — Answer. I am secretary and tnasorer of some railroads. Q. What railroads f — ^A^ The Missouri Pacific and Iron Mountain. Q. What other railroads f — A. Those are the only ones that amount to anything. The others are underlying roads. Q. What are they f — A. I do not remember them all. There is the Saint Loais, Fort Bcott and Wichita is one. I do not remember all these itiads— little roads — of ours. The Iron Mountain and Missouri Pacific aie the principal ones. Q. There are so many you do not remember them ? — A. They are branches. There are a good many of them. By Mr. Anderson : Q. In 1880 what ofBce did you hold ? — A. I was secretary and treas- nrer of the Missouri Pacific. Q. What office did you hold in the Kansas Pacific Railway f — A. I think I was secretary of that. Q. YHiere did you transact their business ?~A. The office was at 80 Broadway in 1880. Q. How long had you been secretary of that company f — A. I guess abont three years. I do not remember exactly. Q. What was the main office of the company, Kansas City f — A. Kansas City. Q. Did you have any connection with the agreement, of which I show you a copy. Exhibit 1, of May 5, 1887 ! — A. No, sir ; I had, nothing to do with that that I know of. I do not think I have ever seen this before. Q. Did you know at that time that there was an arrangement by which a number of gentlemen had purchased securities of the Kansas Pacific with a view to bririging about unity of action between the Union Pacific and the Kansas Pacific ? — A. Yes. Q. You knew who was in that arrangement. Who were the parties! — A. I only knew some of them. I was living in Saint Louis then. I was not here in New York. Q. When did you come to New York ? — A. I came to New York in 1879. Q. You say you kept none of the accounts connected with that pool t — A. Not any ; not a thing. Q. And issued none of the certificates t— No, sir ; never saw them. ft Bad nothing whatever to do with itt — A. ^e^et. p I PlM IT. 8. PAOIFTC ftAILWAY COMMlSeiON. THF, KANSAS PACrPfC CONSOLIDATION. Q. Do you raniember tLe occaeiou of tho eoiisoliJaUon of the Kaii Piioiflc with the Union Pacific I— A. Yes, sir. Q. Do .von remniuher the day on which it took place I I . I do not remember, Mr. Anderson, whether I was pre«i or not. Q. You do not reniemhor seeing tlie articles of consolidation eigm thoal — A. No; I do not remember that. Q. You are finite sure you do not rememlier it f — A. Yes, sir. Q. You are quite sure yon were not a witneas to the arttcles of coi Bohdation t — A. No ; 1 snppose I was, as secretary. Hut I do iioi member the ixtcasion. Q. Please examine the section of the articles, and see whether it minds yon that you were a witness t — A. (After exaniiuing.) Ye*, si Q, Was not thii* quite an event, tho esecntion of this paiwr lij thwe companies ; did it not mako quite a stir f— A. Why, no. Q. It did uott Did it not make any impresHiou on your inind tL_ such big railroads shonld be consolidated, and was there not a gat deal of talk of it at the timet— A. Yes; but there was very little " where I was present alwut it. Q. Do you remember whether there was a meeting of tho board directors of the Kansas Pacific Company before the pajwr was sigDetlt A. There must have been to have the authority. I do not reniPrab any meeting. Q. Do yon remember anything ahontitt Who wrote the mlim of the proceedings of the directors of the Union Pacific hi the mini l»ook 1 — A. I did ; that is, while I was secretjiry I did that. Q. Do yon remember whether yoii wrote them yourself or wlietil HomelKxIy else wrote them and you signed them I — A. I think I »i them myself. Sometimes I wrote the minotes and sometimes M liartics wrote them and I signed them. Q. As a mailer of fact, do you recall today whether there vi meeting of the directors ol the Kansas Pacific authorizing this com datioii beforo the paper was executed t — A. I do not recollent There mnst have been one, though, to have given tho anthority. have not seen the records for eight years — or seven years. (j. If a meeting iseulentd in the minute book, which purporttXaht taken place before the articles were executed, wonld you feel positi that it did take pince before and not afterwards 1 — A. Yes, air. DIRECTORS OF KANSAS PACIPrC AT CnSSOLmATION. Q. Who were the directors uf the Kansas Pa Do yon know whether his holdings had increased about the time of the consolidation ? — A. No, sir. 0* Yoa say you do not know ? — A. 1 do not recollect that. Q. Do you know whether Mr. Addison Cammack was a large stock- kolder?— A. No. He was a stockholder, but I do not renienibor how tage. Q* And James K. Kecne? — A. lie was not a large stockliohler. Q* And James M. Ham T — A. Ho never was a large one. Q* And Bnssell Sage ? — A. He was a large one. Q* And Granville M. Dodge ?^A. He wiis a large holder, too, com- Pttitively. Q. And Carlos S. Greeley? — A. Mr. Greeley was always one of the '^stockholders since the road started. Q« D. M. Edgerton ? — A. He was not a very large stockholder. Q. J. P. Usher f — A. Not very large. ..Q- And Frederick L. Ames? — A. He was always a large liohK-r. 1 ^^ not finish the board there, all of them. Q* I have read yoa the names you gave us from memory, all of whom y<>uthen recollected, I presnme. You made one or two i>arties direct- ^who were not directors at the time, but it will not hurt them at all. ^«ere was the office of the Union Pacific at this same (line ? — A. At ^Broadway, j V. In adjoining rooms ? — A. Yes, sir ; on the other side cf thi- build- 8TOCKHOIJ>£BS OF KANSAS PACIFIC AT CONSOLIDATION. w|^ Please tell me of the gentlemen whose names 1 vp\\\ v^^d \o ^wl *^her joa know tbem to be stockholders of the Kan^ U. S. PACIFIC RAILWAY COMMISSION. tbis time. Whs Klislia Atkin» a Htockliol^^ 19 r B ^V«. 1 I No. <. tha ' all, lar i; iiig ilo li .Ta,v v«ri C jrat ^_ tnci ^BU,o r o V. 8. PACIFIC kAII.WAY COMMIfiSION. Blug was coutemplnteiil auil goiii^ on, but in P. purt I had no part in it. _' Q. It conM not go into eQ'cut until tiits Union PHcitlv oxvRitt«d f^ No. Q. Yun luu.st biivu licuu lotd, at Bome tituu on that day or previous that tliey iiad conseiitutl. — A. I think I know about it previously, Q, You thiuk yon did know about it previously. — A. Yes. sir. r Q. With whom had yon talk(!d, ponding the coiiRolidatiuu f — A. 11 (•liave no recollection of. ^ Q. Wiiat are the nameH of the parties, if you can recall them to y, idind, as being the persous wiih whom you talked on this subject all, at that period, in January, 18S0 t — A. I cannot recall any part4 lar parrien. Q. Do you not recall the fact that you did tulk of this etnbject n>\ iug to this consolidation at this time with Mr. Sidney Dillon f — A, do not recollect it, Q. Do you not recollect that you talked of the ooitsolidation with H .Tay Gould I— A. No, sir ; I suppose I did, but I do not i-ee^ll nny og vursatiou about it. Oonimitiwiouer Andekhon. I do not mean to say that you can ntn Just what was said, but that the subject was discusseti in the utitce b twcen you, Mr. Gould, Mr. Dillon, Mr. Sage, and Mr. P. L. Ames. The Witness. It must have liecn so, and I must have known bl it, of course, but 1 do not recolloet any parlienlar time or any particnli 'oouversation about it. Commissioner Andebson. Mr. Holmes, have you any idea when can receive those copies of minuten from Mr.Mink thathesnid wecoa: have 1 ^ Mr. Holmes. J have not seen him since about it and ho has notiui ^^^Uoued the subject to me. [ supposed ho would be horc today. Iha' ^^^Bot seen him to-day DKNVBtt PACIFIC STOCK. Q, Do you know anything relating to the delivery or the ostracti ' 20,U8(i shanks of stock belonging to the Dcu^'cr Paciflu that M ifeen out of the trust held by the trustees of the coDSoltdat«d mortgi and returned to tho Kansas i'acinc T — A. I rBex)Ilect that that was ' Q. Do you know who brought that stock to the office of the Kaiu PueitlcT — A. No, air. <).. Where were the securities kept; was there li safe in that room' . The securities were kept in the safe ; yes, sir. Q. In your room t — A, Yt\i, sir. Q. Who had cli>irge of that safoT— A. I liad access to itand JnmeJt M. Ham liail access to it ; both of us. Q. You say you remember the fact that that stock was got out of ' Irust! — A. Yes, sir, Q. Did yon tidk to anybody about tiicsc |>roeeeding8t — A. I snpp 1 did, but I do not remember any purti<'ular conversation, Q. Yon do not recollect what was said I — A. No, sir. Q. Do yon remember, after that stock wus got out of the truRt, t> some way or other the Kansas Pacific partial with it T — A. I recoil ,*.V did; yes, sir. M. Do yoQ recollect how it came to part with itT — A. I do not fe< f» circumstances now. Q. Do .von recollect to wliom U. wentA — \, V tl\\»k to Mr. Gould, AMOS n. CALEP. 291 Q. Do yoa recollect on what terras Mr. Gould got possession of it or aovthiu^ ftlx>^t the terms t — A. No, sir; I do not; that I had nothing to do with ; that was done by the treasurer. Q. Do yon recollect whether any proceedings of the Kansas Pacific diiect(MP8 were had by which the terms of exchange were fixed t — A. I do not recollect. ' Q. This stock represented $3,000,000 at its face value, did it not f — A. Very nearly the face value. Q. If auy proceedings had been had by the board by which it was nfovided that some $3,000,000 should be paid to the Kansas Pacific for that stock would it not make any impression on your mind t — A. It foald be a matter of record on the record books. Q. Apart from the record books, would not that have been a very mnisaal transaction f By ^'unusual'' I mean a transaction that very nrdy occurred. — A . Yes. Q. What value had the stock of the Denver Pacific before the con* loiidatioQ had been agreed upon f — A. I do not know what value was put upon it. Q. Had it any value f — A. Yes, sir. Q. For sale on the market f — A. Oh, it was never on the market, that I know of. I never heard of a sale of any of the stock. Q. Had the road not been in the hands of a receiver 1 — A. I think ao; yes, sir. I do not know who the receivers were, though. Hr. Holmes. Walter S. Cheeseman was one. Q. At what time did it come out of the hands of the receiver ? — A. I do not remember. Q. Was it in the hands of a receiver when you were secretary here in New York !-*A. I think so. I think it was in the hands of a receiver btfore I left Saint Louis. Q. Do you not know that the stock of that compauy, down to the end of 1879, had no value whatever, or no perceptible value! You could not have sold it to anybody for anything. Was that not the fact If — A. 1 do not know ; I never heard of any ofifer to sell it, or heard of any price for it ; it controlled the property. Q. Is it not the fact that the interest on all the mortgages was in arrears!— A. Yes, sir. ' Q. And unpaid!— A. Yes, sir. Q. bit not the fact that until 1879 the general result of the accounts — lam not asking for exact figures — showed that prior to 1879 it did not earn enough net earnings to pay the interest on its bonds! — A. Yes, sir. . Q. Then, in 1879, afifairs had imx)roved some, as I remember. That being the condition of the road, do I understand yon that a sale of $3,000,000 of that stock for producing securities of considerable value eoold take place and be arranged for in the board of directors and that yoQ have no memory of it at all ! — A. No; I say it must be a matter of reeord, but I do not recollect the facts about it. Q. Hit occurred in a board meeting, you certainly would have been present!— A. Certainly. AS TO OOXJUyS ALLEGED OFFEE FOR DENVEE PACIFIC STOCK. Q. Did you ever hear discussed in the board of directors of the Kan- sas Pacific an oflfer on the part of Mr. Jay Gould to give to the Kansas Pacific $1,833,000 of bonds of the Kansas and Nebraska and Saint ft , 8. PACIFIC RAILWAY COMMISSION. Jn^cpli Pacific roatls, us piirt pajmetit far thiR Denver Piiciflc stockf A. I do not recollect (bat. Q. You never Leard tbosc terms iliscusscd 1 — A, I do not say I next liL-iird it, but I do not recollect it. Q. Did you ever bear a proposition diacuseetl that Mr. Jay (ioiil Bliould give $302,800 of llastingH and Oraud Island bonds in part pi| icnt for tills stock t — A. That I do not recollect. Q. Or $784,000 Saint Joseph bridge bonds t — A. I do not reineniM Q. Or 4,000 shares of the stock of the Saint Joseph bridge T— A. M Q. You do not recollect that, either t — A. No, air. g. Or $479,000 of the Kansas (.'entral bonds f— A. No, sir. [ Q. i lien none of that transaction presents itself in yoor mind om be|j a transaction which occaircd in the ojien board of the Kausus TiKJJ aA far as yonr memory tterves 1 — A. No, air: I do not remember. Q. Do you think, if a transaction involving all these pevuliurstoc^ and bonds, and the sale of this 20,080 shares of yonr stock, had occiura in your presence and been discussed that your memory wunld nothaf some trace of it to-day t — A. I would reeulle<;t something about it, bS not the details. J Q. Then your impression is that uo such thing was ever discusned f the board, when you were present! — A. Ko; I did not say that. | Q. Does your memory furnish yon with any recollection of sucli j transaction? — A. No, sir, i Q. And you do say yon thhik you would have remembered it, if ^ bad occunx>d before you t — A. Yes, sir. j Q. Did any of these stocks come into the posseasiun of the Kanq PaciUoT — A. I do not recollect that. The treasurer had that ]iart4 the buaincas to do ; I never had anything to do with it, j Q. In regard to the 10,000 simreH of I>enver Faciflo stock thatwfij held by Arapahoe (Jounly, Colorado, did yon over know anything of tl4 stock T — A, I knew that they had that amount. Q, Did you know anything of the proceedings by which tliey p with that stock ! —A. I do not remember. Cj. The stock was obtained by the directors here In Hew ITork, 1 notf — A, The Kansas Pacific directors. Q. By Mr. Gould f— A. By Mr. Gould, I think. I do not P Q. Do you not remember that at the same time that he got Uiftt sta he got some other atwksT — A. No, sir. What otlier stockst Commissioner Andersok. What was it, Mr. Ilultnei^t Mr. IIOLMES. Colorado Central stock. y. Yoii do not know what consideration was jiaid by Mr. Uonhld Arapahoe County for (bat stock T— A. No, sir Q. Have you in your (Ktssession the reports of the eaniings and opd ating exi)en8es of the Kan»«as Pacific during tliu ;>eriod that yon « BGCrelJiry! — A. No, sir. Q. You were examined as n witness in the Morgan case, were 3 nott — A, Yea, sir. Oomnitssioner ANDliRsoN. Mr. Holmes, have yon a copy of the i ord of tlie fiiorgun case with youl Mr. UoLMEB. No, sir; I took it back lomyoRlce; I will briugitliJ fain. Q. You say you do not remcmlier who tlie receiver of the rami wiu>|l ~ do not. Mr. Holmes thinks that Walter 8. Olieesenntti was oq not know who the other was. AMOS H. CALEF. 293 SABNINGS OF KANSAS PACIFIC BEFORE CONSOLIDATION. Q. What is your recollection as to the gross earuiugs and operating ex- I)eDse8 of the Kansas Pacific for the year preceding January 1, 1880 ; that is, fiom Janaary 1, 1879, to January 1, 1880 1 — ^A. I do not recollect the figores ; I know that the earnings increased very much. Q. Do you recollect whether that road earned anything more than its openitiog expenses and the current interest for one year on its mort- gages!—A. I do not remember, but I think it did. Q. Do yon know how much more f — A. No, sir ; I do not. Q. Were you examined as a witness in the suit that was brought to get this stock out of the trust T — ^A. I think I was. Q. Do you remember before whom you went? — ^A. No, sir. Q. Do you remember who was present when you were examined t — A. I do not Q. Do yon remombei* who examined youf — A. I do not. Q. Was Mr. Holmes there f — ^A. I do not remember. Commissioner Anderson. Mr. Holmes, why do you not produce more impression on your witnesses T Bir. HOLKES. I have had no conversation with him for six months. Oommissioner Anderson. No; but you examined him in this case, and he does not seem to recollect it at all. Q. Do you recollect that you were asked in that case what the gross caniiogs and operating expenses of the Kansas Pacific had been for the eleven months preceding the date of your examination T —A. I do not remember. Q. Do you recollect reading over that evidence after it was written oat!— A No, sir; I do not recollect it. Q. Do you recollect some discussion as to whether some lines should be scratched out or not f — A. No, sir. Q. Did you scratch out any lines in that evidence f — A. I do not re- member. Q. What is your best recollection ! — A. I do not think I would scratch out SDything. Q. You do not think you did t — A. No, sir. Q. Do you remember when you read that evidence, finding that some- thing stat^ in it was incorrect, and you wanted to amend it or change itt— A. I do not remember reading it. Q. How would you answer this question to-day, which was put to yoQ on that 0(*x»siou : <' How much was the surplus left of the gross earnings of the Kansas Pacific for eleven months before the Ist day of Janaary, 1880, after paying operating expenses, taxes, assessments, and interest on the mortgages!" — A. I should say there was a surplus, but how much I do not know. I do not remember the figures at all. Q. How much was the interest charge for a year! — A. I do not re- member. I think $1,300,000 or $1,400,000. Q. How did you come to be a witness in that suit ! The Witness. In which suit! (commissioner Anderson. In the suit brought by the Kansas Pacific against Jay Gould and Russell Sage to procure leave from the court to take this Denver Pacific stock out of the trust. A. I suppose because I was secretary of the company. Q. Do you remember who asked you to come around before the ref- eree t— A. I do not. Q. Do you remember whether you got any subpcena ! — A. I do not. Q. Do yoa remember talking to Mr. Sage or to 5ilr. G[Ow\0i,\i^twfe"3^s^ »aff^ awoDd f^~A. No, sir. it' . PACIFIC RAILWAY COMMISSION, Q. Or to Mr. Bitlnoy Dillon!— A. No, sir. Q. Do you remember tlie fact that Mr. Sklnc.v Dillon wiw there n 1 ilo iiot. Q. You do Lot remember his testifying I — A. No, sir. Commissioner ANDHRSON. I will wait, Mr. liolmos, niitit yoiiget book that you say you have and will bring to us. "r. Holmes. Yes; but 1 think the witness is uutitled to nee the Cg louy which he signed, and the erasures whiuU you speak of, anilj| hether it is in his handwriting. That is the best record of it. |: Commissioner A?)DERsoN. I will send for it. Do youUiiukitl *fai» handwritingT Mr. Holmes. I said Mr. Oulof wna the best one to tell. By tboCHAIRMAK: Q. What were your duties as secretary » — A. To keep tlwr^ tlio company and sign the stock certiUcates. Q. What other company were you secretnry of in that yeoje, the i of the consolidation T — A. None, I think. Q. No other companies T — A. I wart, too, ol the Miasonri Padl)c,| oue 1 am secretary of now. Q. Did you keep tlio accounts in the same oDico t — A. Yes, i tj, now many hours during the day were you at the office iu the | of the consolidation T — A. From !) until (i. (J. Were you present at tlio directors' meetings regularly ! — A. ] of them. I was not present at all of them. tj. Do you recollect the atlendanco of the directors t The WiTSESS. Do yoa mean to uotiiy them T The (Jhaiicman. Do you recollect the average attoudanoo at I leetiugs, or the number of gentlemen attending the regular mcetf t)f the board t — A. No ; I do not remember how many. Q. Do yon recollect the fact ttiat some of them did regularly atti and others did uotl — A. Yes, sir. ,i The CnAlBMAN. I ask these questions to test your memory, thatifl 'AS 'i'O DKPOHITION OF WITNESS IN SUIT OP KANSAS rACtPIO AOAll fiODLD AND SAGE. Ij By Commissioner ANDEiiaoy : Q. (The deposition in the suit of the Kansas Pacific Hallway Oomd kinstJay Uould and Russell 3.ige having boon procured, vaasU the witness.) Tlense look at that siguaturo and say if it Is yon Yes, sir. Q. Look at the page preceding and tell me in whose handwritiiijg lU words, " at the rate of half a million per annum." — A. That ie i Q. That is in your handwriting! — A. Yes, sir. Q. Who ma^Io the erasures of tbo four or (Ivo linos that Iiavo I senilcbed outt — A. 1 do not recollect Ihnt. Q. You do not remember whether you made it yoursclft — A. 1 not think 1 did ; I do not remember it. y. [Mouse read that question and answer aud stat« whether, as I rectfd to "at tbemteof half a million per annum," it is correct or on A. I think so; yes. sir. Oommissiouor Andeeson. The question is : P.i ymi know wliothBr or not llio eiiniii jwiiy ilrirln^ Itic piuit year huvu bL'ua ia u — ■•, nud jjavmenta for tusus, runioo ■f tilHO 1 iml rceciiiiH of [tie KanHM pM]li«(j w uf ilB iixutl liitorMi. oliarge nlo. rom'Wfclii, und rcjiAlo ' AMOS H. CALEF. 295 Tbe answer is : Paring tbe last eleven mouths at the rate of half a milliou i>er aonum. the words " very litUe" beiug scratched out. I have before ine a trauscript famished by the officers of the Uuion Pacific Bailway of the meeting held by the directors of the Eausas Pacific on the 24th of Jauaary, 1880, at 11 o'clock, sabscribed by your- self as secretary. I understoiod you to say before that you recollected nothing in regard to the transaction in Saint Jo and Denver and other bonds f jhe Witness. Yes, sir. KA5SAS PAOIFIG MINUTES AS TO PURCHASE OF BONDS OF SAINT JO AND WESTERN. Gommissioner Anderson. I now read you this from the trauscript : Xhe president reported that, parsaant to authority giveo to this compauy by the l^vgof Kuuns to parchase and hold the bonds and stock of any other railroad com- ply or companies, this company had bought the following bonds and stocks of «QAds whose lineS| constructed or being constnicted, connect with the road of this xnpiDy, vi* : A nugority of the shares of stock of tho*Saiut Jo and Western Company, at |20 |>or ,toie, $1,833,724.03. Ako, rooeiver's certificates of the Saint Jo & Denver City K. R. ; and mortage bonds of the Saint Jo Sd Pacific R. R. Co., Kansas & Nebraska R. R. Co., since eottolidsted into the Saint Jo & Western Railroad Company, at par; also $784,000 BiiDt Jowph Railroad Bridge first mortgage bonds, and 4,000 shares of the stock of wd bridge thrown in, for the sum of |784,0U0 (fur said bridge bonds and bridge stock). All of said snms the Kansas Pacific had agreed to pay on or before sixty days, in the fall-paid stock of the Kansas Pacific Railway, or in the consolidated mortgage fMmdB of the last named railway company at par. Do yoa recollect that transaction at all ? The Witness. I do not. That is the first time for seven years I have qeen or heard anything of it. Q. Does what I have read refresh your memory that there was some- thing of that kind that occurred f — A. No ; not at all. Q. Tlie entry, as I judge from your testimony, is in your hand- Tritiogf— A. I suppose it is. Q. What did you make that entry from ?— A. I do not remember. I 4o not know that it is in my writing, unless I can see the records. Q. What was your practice in regard to making entries in the minute- boolLf— A. I made most of them, but if I was very busy I had a clerk to write them out, and then I signed them. Q. You recollect this particular meeting that related to the consoli- dation and that you were present there f — A. I do not know if I entered the records or not on that meeting. Q. Yoa do not know whether you wrote out the minutes or not ? — A. Iconld not tell ; no, sir. Q. Do you know how long after that meeting was held the minutes ^ere made up 1 — A. I do not. Q. As a matter of fact, the minutes were not entered by you in the book daring the meeting in any case, I presume T — A. Oh, no ; after the meeting was over. Q. You are not a shorthand writer ! — ^A. No, sir. Q. So that whatever occurred, you would keep a memorandum on a loose piece of paper ; is that so ! — A. On a pad ; yes, sir. I do now, at all oor meetings, and write them out afterwards. I Q. How long afterwards would you write them out t — A. Within I tmty'foar hours. ^ . PACIFIC RAILWAY COMMISSION. Q. Do you kuow auytUiiig about wliat was doiiu with refureuce m traiisiwtJoQ BiibBeqaently f — A. I do not a singlo thing. Q. Ttio resolulioD duclares that tlio Ktocks I liavc ontimcrut«(i w to Ite paid for on or before sixty diiyM in tho tiill-paid Block of lUu Kan I'lLoific Railway Company. Did I uot uudcrstatid yoii to any that ft basinesa to sign transfers of stock F — A. Y«i)| sir. Q. Do yoa rGColIect whether any sack Htock wiwt issued after iting of January 24 1— A. I do not recollect that. PDECHABE OF CENTRAL BEANCn UWION PACIFIC 6T0CK. Q. The minutes continue : ■ Q. ^^^^H . The pretidcnt ulso reported a like iiurohMe on bulialf of tliU ^^BfsliaTM of stock in tiiu Central Untnch UdIod PaoiAa Eailroiul Cnmpi ^^^^ to l>o puid for, Olio half in Kansaii PaciQc conaolldated liondn at par, ImqimI oa tiiortgngo Mny I, im>, nnd tbo olhor half In Union Paoi&o noltatoral trust ' Do yon recollect that transaction at all ! — A. 1 recollect when 1 Centnd Itraucli stock was pureUased, and who it was pnrchaaed ftu but I have forgotten the price, or how it was paid for, and everyllil niao. i iiover had anything to do wrth the aettlement for them, Q. You do not recollect the fact that at that meeting the fact« I ba i-ead were reported to the meeting 1 — A. No, sir ; 1 do not. Q. From whom was that Central Bramih Uuioii I'aciflc Railroad 0( pany stock bought t — A. From Oliver Ames and Mr. Pomeroy. Q. What Mr. Pomeroy t — A. He is dead now. He used 10 b« 1 , president of the Central Branch. Q. When did Mr. Ames die! — A. Mr. Ames ia governor of 'diusetts now. Mr. Pomeroy died a year ago. Q. Mr. Oliver AniesT — A. Yea, sir. R, M, Pomeroy, Ue wan pn dent of the road and built it ; that is, a great part of it. Q. Did you ascertain at any time from whom the other shares tbi have referred to were purchased ! — A. No, air. ; Q, Your minuter tbeu continue : On niutlun. Mr. RuhadII Sugi>, occondixl by Mr. F. L. Auidb, it wan I ICmoleed, That tlm uotlon of llio presidaut in tho pnroliiMOH (if tbo said boodt I atvok, Aud Bitoh of said purchiuo^, ho, anil oitob of tbem la, scvorallf ratlfletl mi4 I Do you recollect any such resolution as that betug put and carried A. No, sir. I Q. It further appears from your niinntea that at the same mMtii I Ou Diiition of Mr, Sagu, socnnilcd hy Mr. Eilgorlnn, it waa llMolvptl, That oS6ession at all. Commissioner Anderson. Can you furnish us with the report oi 1879 ! We have the others. Mr. Holmes. I have not looked at it for years ; perhaps I ct^ find it. The Witness. It says here that the gross earnings were $4,873,0'* The Chairman. Let them furnish us with a copy. Commissioner Anderson. Have you a report for 1879 of the IM^ . ~ iflof J AMOS H. CALEF. 299 yp« HiNK. H'o, sir; I have not. (}(^0imi88ioD6r Akdebson. Where are the books Y ]{r. Mink. In Boston. Ooiiimissioner Andebson. Then we can get it from the books Y ^r. Mink. Yes, sir. FINANOIAL CONDITION OF UNION PACIFIC, 1876 tO 1879. N Q. What was the general condition of the Kansas Pacific Railway Oofopftny daring the years 1876, 1877, and 1878, in regard to its flnan- jal condition f — A. She was pretty poor. Q. All of its interest on all forms of securities was in arrears, as I anderstand itY — A. Yes, sir; extended. The conpons were fanded. Q. Were there any payments made at all of interest on any of these bonds daring these years Y— A. I think there were partial payments on aomeof the bonds; half in 1877, 1 think. Q. A payment amoanting to how much Y — A. I do not remember that. Q. Do you remember the fact that it was a compulsory payment, on » gait brought on the funding mortgage Y — A. Ko, sir. r Q. Ton do not remember the amount of it or the circumstances under f bieh it was paid Y — A. I do not. Q. fiat, in general terms, the road remained embarrassed, and with its coupons in arrear, for the years I mentioned — 1876, 1877, 1878 Y — A. T68,8ir; but in 1878 the business commenced to improve very much. q1 And in 1879 the business still grew better Y — A. Still better. Q. Was the road in such a condition that under such circumstances as then existed there was any possibility of its earning a dividend on its stock, without the consolidation with the Union Pacific, at that time!— A. No; if they had been enabled to do a through business they woold have paid dividends years before. Q. Bat, without consolidation, and without through business, was the Kaqsas Pacific able to earn dividends on its stock, as matters stooil before the consolidation Y — A. No. Q. Ton think notY — A. No; but I think, with the improvement that etme in 1878 and 1879, she very soon would have been able to do it. Oommissioner Anderson. The earnings would have had to increase very largely over those of 1879 before it could have paid dividends on tbe 110,000,000 of stock ; that would have required $600,000, at 6 per eent The Witness. In 1879 she earned $4,873,000. Oommissioner Anderson. That was gross earnings Y The Witness. Yes, sir; it would not have had to increase so very mnehmore, with the fixed charges $1,300,000, to have earned a dividend 00 its stock. Q. What was the rate of the operating expenses Y — A. That I do not leeollect ; it varied. By Commissioner Littler: Q. I would like to ask yon this question : Do you remember liaviug 8wom as a witness in the case of llenry Morgan against the XTiiioii Pacific Kailway Company Y — A. I remember I was a witness in that case. Q. I call 3'our attention to a question which was propounded to yoa, ttid abo your answer : IV» yon know whether or not there have t>een at any time any surplas eamiDSS of fjy Pactfie Railway Company, upon its line from Kansaa City lo \\ia3I^«^ ^ iBOO i;. 8. PACIFIC KAILWAY COMMISSION. (KMit, mill l^oiu IiOitviiuniirLh to Lnwivnuo, ovar mad alKivn kU uxponMM »f npnr Uriil ntllwny. nod aurrj'hig on its bualauM, inolndiuK taxen, ■nwiuminDtii, miiI montaon tbo iiiuambrnncos prior in lien to tho liuti of tlio iuoi>m» mnrtgogul Yonr answer jh, "Tbore Las not been." Tliat waa true lh«ii, ai true now I — A. Yes, sir. Oomniissiouer LiTTLEB. Auother queslioii wns propounded : Hua Ibero b^n any period of time botweou tbe (Icfault of lbi> ui>ui|iauy uimti i murtgaite obllgntlouH iu 1^4, tliu occanjou upon nhicb you stitUxl Lbe roupop ». ofttM were isaiied, ami tho SUtli daj of Harob, 1080, w1i»u l\u> coiuiianr »m u doTunlt upon HOmu of itHiuterMt obligalioDSjellber to Ibu Uovoiiiiui'iit ur lluib«l of lla February aud Auguot or iti Junu and Doumubor bondii t Your answer wtia, " There baa never been a time when tliey were in defaalt." The Witness. Tliat is true. ,'OOKDITIONS EXIHTING AT TIME OF KAN'HAtI I'AOIFIO CtiXKOLIDATB Q. So that waa true at tbe time tbe Kansas I'auil)cc(iiiitoIi, but that she did. Ii i not state that. If these are gross earnings here, of $4,873,000, 1 tli I |>crhaps she did. K Q.I read yon a list of tho mortgage indebtedDess of this nxul, pr A the several items : Tli« tirnl-utuTtjfagi> l)ODils viiiro ,,. |(^9 ^ftd £>nni'orcx(.niiBi«ii IhiiiiIh vreiQ M ■ Jvm veil worth bratioli was .->.—.•.•» '. AMOS M. CALEF. 303 ^ fint land-grfttit bonds were |l, 480, 750 iflieaeeoDd laud-grant bonds were 1,500,000 goeood^mortgago income 4,275,350 jijiiding bonds 1,500,000 Coopon certificates 2,340,503 Making a grand total of 24,335,603 GONCEBNING EARNINGS OF KANSAS PAOIFIO. That is sapposed to be the aggregate amoaut of the mortgage indebt- ednesses of this road on the Ist day of January, 1880. I now ask you wbetber that road was ever able to earn interest on that amonnt of in- debtedness t — ^A. lean answer tbatup to 1879; about 1879 1 cannot teOyoa. Q. It is a mere matter of calcalation how much it would take to pay ! inttfest on this indebtedness at 6 per cent. Will you tell me how much I $34^,693 would require ? — A. One million three hundred thousand ddtoandodd. I Q. Do you remember the gross earnings of that road for the year ' 18791— A. It is here. Q, What is it t — ^A. Four million eight hundred and seventy- three tboQSSDd dollars against $3,610,000 in 1878. Q. What were the net earnings of the road Y — A. It does not give it. Q. Have yon any means of ascertaining the net earnings of the road • lor that year t — A. I have not. Q. Was it a sum equivalent to the amount of the interest on this in- debtedness t — ^A. I do not know. ITere is an increase of $1,200,000 in gum in that year over 1878. Q. Assnming that this Kansas Pacific Railway, with all its earning opacity, was never able to earn the interest on its bonded indebted- . MBS, what was the value of this $14,000,000 of stock: $10,000,000 in the Kansas Pacific and $4,000,000 in the Denver Pacific ?— A. I could lot answer that.^ Q. Had it any real market value ! — \. Yes, sir ; it always had a urket value. Q. Had it any property of value behind it after paying the liens to which it was subordinated ? — A. I think so. Q. Do you mean to say that all the assets of the Kansas Pacific Bail- vij, including its branches, would ever have sold for the $24,000,000 vUeh I have mentioned at public sale or at private sale Y — A. I think it waa worth it. Q. You think it is worth itY^A. I do. Q. In what market f — A. I think it is worth it to any connecting line. Q, If it was worth that sum of money, would it not necessarily follow thatit would pay interest on these $24,000,000? Otherwise would it not be a bad investment Y — A. I have no doubt that she earned it in 1879. The three or four years from 1874 to 1878 were terribly bad years. Q. I do not donbt it; but do you know that it didY — ^A. I do not, bt I have not the figures. Q. Is it not true that these income bonds and the coupon certificates i^liieh were a lien upon the road were greatly below par at about the Smethis consolidation took place? — A. The income bonds were. The tapon certificates I never knew the price of. We had no market out Iwre. Q. If that be true, why do you say that this road was ever worth IM,00O,O0O, and would have sold for that much Y— A. She had a laad nut that was worth $15,000,000 or i^20,()00,000. f laiul-c If. 8. PACIFIC RAILWAY COMUISSION. THE KANSAS PACIFin LAND GKAMT S0KD8. Q. Hnw wora tlioise laiid-grtint bonds; weru uot all the IadUb , iged tosctiure tliu laiid-gruiit bumlul — X. Y(m, sir; btil the iwiti laiul-graiit boiidtt was quite email. Q. Were not all tlio lauds inortgiiged and wore thoy not all subjcfll tb<> laiid-f^rant mortgage T — A. Ye«, eir. Q. Tlion tlic laud-grant mortgago did wot aid the otliwr luiuds wl woi-o Hot secured by that mortgage 1 —A. No, sir. Q. 1>(> you mean to Hay tliat tliere was a large margin in tlieufi lui iillor paying off tUe land-grant mortgage T — A. Yea, sir ; tbu landun mortgiigeB, flrHt and second, only amounted to $3,500,000. Q. Uow many millions of acres!— A. I lliink about 6,000,000 (j. In wbat partof Kansas are those lauds located t — A. All throo Kansas, right along from Wyandotte west. Q. The larger portion was in the extreme western part of the 8tai — A. Not the larger portion. Q. Do you know what the average price of lauds was at that Ij along the line of that road!— A. I think the average price was M tiling over 83. Q. Do you not know that a great deal of that land west, porticnll I on the Denver extensiou, was hardly worth the Government prioi I that tiinL' t — A. I know, but overy year ! ('OmminHJouor Littlbr. Uut t am talking about lliia in 1870. J Tlie Witness. Ves, nir; it dul uot have much valuo then. I Q. Not much T— A. No. I Q. Do you give it as your opinion that if that laml-grant mort| I had been foreclosed and the land sold iu IHIQ, (here would have i L a surplus atter paying the interest! — A. Yes, sir; largely. I th ^^^wtbat land-grant would pay out certainly $12,000,000 alKive the : ^^^Kmd second land-graut bonds. ^^^H By Commissioner Atidbuson : 1^^" Myuient of Uio fint .on tbo (!«D«o1idalciI liuuda and for ulher i:idubto4lniiu i>r tliu voiniiaajr. The Witness. I have not said thero was a surplus in I8T9. The Chairman. There could not have been any surplus iu 18T91 The Witness. I suppose uot, from that; butthoroud shows |1,! 000 uioru grosa iu 1S7U than in 1878, and of course 40 per cent of t must have been net. There must have been a large increase iu li*^ but we have uot the flguroe here. A. a. OALBl AFTERNOON SRB8ION. Mr. Holmes. I desire tfl ask that the letter from Oliver W. Mini May 11, to Ihechuirinati of theComini-sHiun, in rcsiKiusc to the tnqol fif tlw *Jommt8sion, and t\iw iwx.n\n\«ws*\\*ft Aiw\w\i>\\tn, Iw cuiiivd in reoonl of flie ComuiisRioii. M k f LETTER OF OLIVER W. MINK. 305 The CoAlUMiVN. They will bo put in the I'ceord. Comuiissioncr Anderson. In connection with theletter will be printed tbe luiiiute^ of the Union Pacific, the minutes of the Kansas Pacific, anil theiuiuates of the Denver Pacific Companies, held on the 21th day ol' Jaunary, 1S80. They are as follows : Buililinn:. Charles P. Adama. Jr., proAtdeui ; KHhIiu secretary auil trtMHiiror ; Oliver \V. Mink, (Mmiptrullor; LETTEE OF OLIVER W. MIXK AS TO EXCUANGE OF DENVER PACIFIC STOCK. (TbernioD Pacific lUilway Company. Eqaltable AUioSt v^ce-pi^^^*^^^ : uom'y AloFarl.ind, aecr YuA-^f* box No. 5287.] Boston, Alay 11, l!-te7. Hon. Robert E. Pattison, (Mirman United Slates Pacific liailway Commission^ Xo. 10 Wall Street, Xew York.X, P.; DeabSir: I aui in receipt of your communication of tlio Gth instant, making cor- Uin inqairieB in relation to the exchau^o of the stock of the Denver Pacitic Railway god Telegraph Company at the time of the consolidation in January, 1880. I Mibmit the foUowing answers : Fint The receipt for the Union Pacific Railway Company^H stock issued in exchange lor tbe Denver Pacific Railroad and Telegraph Company's'stock is in tbe handwriting of Mr. James M. Ham. Seeond. The Union .Pacific Railway Company*s stock so issued in exchange wna de- liyeied to the consolidated company and treated by it as stock owned by the company. I am uot able to advise you as to whether or not tliero was any trust in which tlu; Union Pacific Railway Company was recognized as the beucliciary, but I know of no circnmstBnce which would have made a trust. necessary. Tliird. The accounts of the Union Pacific Railway Company show that that coiu- poiif derived all tbe advantages arising from the sale of said stock. Foorth. Tbe minntes of the meetings of tbe directors of the Kan.sas Pacific Railway CoopaQy, so far as they relate to this transaction, are subuiittod herewith. Fifth. The books of the Union Pacific Railwav Company, the successor by consoli- dation, show thu compensation received for said Denver Pacific stock. Sixth. In answer to this question I reply that at the date of tbe con.solidation the Kansas Pacific Railway Company was tlie owner of lU),!)--^ shares of tlie stock of tiie DenTer Pacific liiiil way and Telegraph Company, which had been ac0 Jaooary, le^. 10,000 shares bought from Jay Gould, at $10 per share. 100,000 These 39,989 shares thus owned by the Kansjis Pacific Railway Com- pany cost, therefore 750,0l»0 ThisBtock w:i8 turned over to the Union Pacific Railway Company ami regularly altered by the consolidated company on its books of account as an asset. IUb stock was rcgnlarly exchanged for stock of tbe Union Pacific Railway Com- pany on the following dates, viz : Shan'H. FBbruaTyie, 1880 :59,98(» January 6, 1887 ^ Total 39,9S9 lu addition to the above, in connection with other transaction.H, the Union Pacific JUlIway Company acquired 3,140^ shares of it^ own stock through exchanges, nmdr nihily at or about that time, of stock of the Union Pacific Railroad Company ami itoekoflhe Kansas Pacific Railway Company owned by the constituent compauictt and then tamed over to it. ITie Union Pacific Railway Company, therefore, aci)li Brides Bu.lding Company's stock, 4,000 shartw { Ijuint JoH(i|ih and Westeni Htock, 15,1IM Bharos, at t!0 Hastings and Grand Isliind bonds 1^5,000 DO I llullConnly bonds 7&,000 00{ TolJil , Vlily 7, I9H0, deiivonil to Jky Ooiild iii t)ayRionl for tbn rotlowlug m'curitiet: Saint Jusepb and Paoilla Railroad Hrat-utortgage bonds %lany oa stock owned by it. After . Ixwn esobougod, the new stock wo* iliNiKMcd of and tbe procjetts wem Bp|>IMb oonaotiilated company to its own odvnntngn. That ooui pan y received as »eeni tinii for the stock, the seoiiritio* and oaah above set oa'.. The Saint .losoph and PaciHc, the Kaneas and Nel)ra«ka, tli« Halut Joudahave been oittliangeil for bonds of U '~)nh and Qrand Island Railroad Company, which laii[-u»ui»dcompany'sboi» ilTcd, were sold at a proHI of t428.615.98. The Saint Joseph and Denver City receiver's ocrtiflcat«s wore paid in fall i forest. I'be ^int Josnpb and Western and the Saint Joseph Bridge stocks f . iihangeil share for share for stock of the Saint Joseph and Oraud Island Mai Company. The stock of t lie last-named company is, lam advised, now seUIncM 2H l« 110. Taking Into consideration the amonnt reaHsed on the Bnin t- Joseph andOraulI MO uri tics, and also the amount realized on the Union Paoille stock rectived 1^ change for the Denver Paoi lie stock, the not prolilAof Iho Union Paollle onlbtL actions in i>ot «{ l\iQD>i\wi« VacWwiComv^tt'^ \i\'ttwo,'^\>« MINUTES OF MEETING OF UNION 1»AC1FIC DIRECTORS. 307 ^lia. I am uoi able, at prosonfc, tboroforo, to fiiruiHli you copicH of the mimitoa of iiioetings held by that company's directors in January, 1880, bat will do so at thu [l^ni moment possible. I remain, yours, respectfully, OLIVER W. MINK, Comptroller. MINUTES OK MKKTING OF UNION PACIFIC I>I RECTORS, JANUARY 24, 1880. New York, Jannarjf 24, 1880. f^ special meeting of the directors of the Union Pacific Railroad Company was held, ^greeAh\y to required notice given by mail and telegraph, at the ofiico of the presi- ^t, 78 Broadway, at 11 o'clock a. m. pieeent: Messrs. Dillon, Atkins, Dexter, Dows, Scott, Baker, Amos, Cammack, sod Homphreys, and Government directors Niles, Cha~ ••u»i >•»•■ Hfliiri Rivor, at the month of the K an sna Hirer, on tlinaonth Hide thernoT, with » j from Wyandotta in the Statn of Kuhhoh, hoin)! from the out StAto litin of Ki»ui Denver, 639 milos In IcuElh, with a bmni^U trnni a point ou tha main lino nn«r ( rx^uco to Lenvenworth, 34 miloi iu leoglb, In aaiU Stal« of Kansas, connocllit Dunvcr with tho Denver rnoino Rttilwu;, aud ia eiilitl«l to extend said rnllnij the wMtttru buntidar.v of tlio former Territory of KiiDtuta, to tooato And oonid bruncibei of said rnilmacl in the counties of the fonner Terrilorj' of Kanoaa >djii to tbe line of aaid rullrond, an thou located and defined bylaw; aud 1 Whereas the Denver pBtilio Bailway and Tele)[rauh Compnny, under aodJ virtne of the said uota of CotigreBB. and of an aot of Congress approved Hoitdij 16611, entitled "An act to authorise the transfer of tarda granted to the ElnluQ] oilla Railway Company, EaBteru Division, between Denver and the point of eooi tion with the Union Pucilia Builrosil to the Denver rocille Bailwoy and Tale^ Company, and to expedite the oumplelioo of railroads to Denver in the Tanitori Colorado;" and of on aotofCongrBas approved Jnne^th, 1674, which, amoiutOH things, onaota that for all the purpoBus of the said act of July 1st, I%3, aodaCJ aebs amendatory thereof, "the Denver Paollia Railwny nndTeleKraphCompaturfl be dtwrned and tnken to be a jiart and extension of the road of the KonsM Pad Iteilrood to tbe point ofjunetiou tboreuf with the rood of the LTatou PaoifioBaiS Company at Cheyenne, aa provided iu the act of Muruh 3d, 1850," whereby Mm foreo wberonf the auid Denver Pocilie Railway and Telegraph Comuony is lilui entitled to partieipate in the benelitsof tliu afureuieutiouedaets of t5otignwsof J lot, ld6iLand Jnly !id, KftM, and the varloua nets amendatory thereot and saHJ mental thereto, and relating to tbo Pooifia systuiu of ruilroada, all of which, whofl pMtieularlv herein deauribed or uot, are, for greater certainty iu this beliolf , r«fa M wad moae part Iieraof ; anil 1 Whereas the aaid Dunvuc Pooiliu Railway and Telegraph Company owns ■ lioj road, one hundred and six miles in length, extending from Denver, where it cono with the aaid Kansas Paoiflo Railway, to Cheyenne, where it uonneots with the Ul ]'ii<i|i(ii.'tlvi.' ort;:iuii;iitiuiiH ; and Wbeiww L'aoh tif tlie said :i1ii>vo-niontionod three companiea, by curporww l_ lUily and Mivcnilly hoil, linve resol veil, pursuant to the anthoritV in tbatbobalfn In tlieuk by luw, to unite mid oonnnlidatu their UMpeotiveorgaDtxatlODS inMon* pnuy, anil have sovnrally agreed to and with each other upon tlie ternisof saob I and oonsolidatiou, buing the terms herein embodied and oxnrosaod: Now, this agreement of union and oonsDlidatiDn, mode this the twenQr^eutt] of January, A. I>. IMriO, betwoen the said Union Paoifio Railroad Componyi pH (he first ])art. the siiid Kansas Paoifio Railway Company, party of the sooond ; and tho said Denver PaDillo Railway and Telegraph Company, party of the i Wltneasoth, Ihtit the nnid pnrtioa have rostieetively agreed, and do borcbyw ally agree to innl witli •'m'h "ther, upon tho fotlowlng nrtlolos of iinlr ' " datioa of tlK'ir n-nin'i'in i' i>i;.-iiiiiiationa Into one company, xU: Articlk 1. i 1^1 I iMoii I'oeida Railrowl Company, the said Kantu Fm Railway ('iiui|< l'i\, ^m! i In' -;Lid Denver PuolHo Railway and Telegraph CompH] oonsidonulioii ■.! hi |n"ini-i'H, du liei^'iiy severally aareo to and witli "fwh ntbo iiiillr iin.l ,..n-.:!i.hi.-, i.-i.l <\; li.Ti'liy uiiiU', form, and o«n«idM,.S' llirir ir.,MvHi ■111' !■'■■ i' I'l. I""-' ■-. !'"■ i-PLiii li il III rr>™ivo (torn tho Govi'i'Miiii i.r mi J:, i mu a resiieotivcly, at tlie di to ttudnr the acta of Coa ompauiaa so oonatliili 'land for iiMiroUot I any* theptti 1 the United Sute^ «1 :.m\xt.ii under a law of tDsDl ik: nud nllof tbo pruvistontsf ' 'II their nature appllsi I. nliuli ai>(>ly thereto, it being tho Intent of the pM iiionaiidcunRotitUtiou to organise the ooinpany Ml "ougreaa, uiid to make the aaid aola of Caupg' Liiintitliitiou to organ! ., ..lid to make the aaiL , a of this oompanir as fnllf oa if the a«ue wen MINUTES OF MEETING OF UNION PACIFIC DIBECTOBS. 309 lgr» II« The name of theoonsolidated company hereby formed sliall be tbe Union pacific Railway Company. ^^. III. The capital stock of the said Union PaciQo Railway Company shall be ^^y inQlionB seven hnndied and sixty-two thonsaud tbroe hundred doll irs ($50,762, :U)0) (bMOgthe total aggreffate amount of the outstanding stock of the three constituent ^DOipsnies), which shall be divided into shares of one hundred dollars each, and it gjiillbe issued in lien of the stock of the said constituent comi)anies on tlio Hurrcnd(ir ijieieof, for that purpose, by the respective holders tbereof . Cveiystockholder in the Denver. Pacific Railway and Telograpb Company and in tUe Uuion Pacific Railroad Company shall rectdve, in place of every Htiare of one liandred dollars surrendered, a share of one hundred dollars in the now company, and eveiy (Stockholder in the Kansas Pacific Railway Company, the shares in which an^ oaly fift^ dollars (|50) each, shall receive, in place of every two shares of the stock gttbfltune held by such stockholder in such company, a share of the capital stock of tlie new corporation, upon surrendering to the now corporation the certiiicates of itock held by such stocKholder. AkT. IV. The said new corporation shall, without unnecessary delay, issue certili- cates of stock in such form as may by the board of directors be deeu'iod advisabhs gnd sacb board shall provide and ailopt such rules and regulations as may be noccs- Hry and proper for the issuing and tninsfer of shareii of stock of the said new corpo- ntioD. Art. V. The directors of the said Union Pacific Railway Company, to be elrct^'d by tbo stockholders at the annual meetings herein provided for, shall be fifteen in namber, each of whom must be the honafide owner of at least fifty shares of stock iu tbe consolidated company. Such directors shall be chosen annually by a majority of the votes of the stockholders voting in person or by proxy at such election. And th«\v Bbalicontinne to be directors until others are elected nnd filled hy the remaining directors at any regular meeting of the board. The directors of said company shall^ annually, as soon as may be after their election, dect from their own number a president and vice-presideutl an, ot T«i\it\^\» 310 U. S. PACIFIC RAILWAY COMUSSION. tlie amount of stock or bouds which such consolidated company is liy law aathoriMd to issue or make. Nor shall anything herein contained affect or impair the right to issue all nni bonds under the Kansas Pacific Consolidated mortgage of date May Ist, 1879, whereii Jay Gould and Russell Sage are trustees; but such nnissned bonds may, notwith — standing this consolidation, be issued in the same manner and with the same eflecl in all respects as if those articles had not been adopted and excnted. And it IS expressly agreed that the stockholders of the consolidated compa ny sbal have all the powers which would have been possessed by the stockholdera o f eacl constituent company if this consolidation had not been effected, to ratify, ap prov< and carry out any contracts made by either constituent company, and reqniri ng tl ratification or approval of its stockholders. The ])ower of the Union Pacific Railroad Company to issue all nnissned bon< under the mortgage of July 1st, 1879, wherein the Union Trust Company is trnste. is fully and completely reserved. Art. X. The new company hereby formed does not herein assume any separate individual liability for the outstanding debts, obligations, and liabilities of the i H[)ective constituent companies, whose several and separate existence as to third pi ties, shall, as respects such debt's, obligation^ and liabilities of every kind and ni ure, still continue notwithstanding these articles of union and consolidation. &- nothing herein contained shall prevent any valid debt, obligation, or liability cither constituent company from being enforced against the property of the pro^ constituent company, which by force of these articles becomes the property of t:;. H con»olidated company. The corporate existence of the respective constituent companies shall not ab lutely cease eo inatanti on the consummation of the union and consolidation her«^ ■ n provided for, but shall remain and continue so far as necessary to carry out the v vi- tent and purpose thereof. Art. XI. These articles of consolidation shall go into effect, and the consolids. ^ «^ ctunpany hereby formed shall come into existence, upon the day on which a o^»S7>.v hereof is filed in the Department of the Interior, as provided in the legislatiorm of Congress in that behilf. Art. XII. The existing by-laws of the Union Pacific Railroad Company are herc^^&jy provisionally adopted, and shall apply to the company hereby formed, until d. "mjm. 1} changed or repeated. Art. XUI. All books, vouchers, records, instruments of title, cash, evideuac» diiht, contracts, and documents pertainin*? to the business or property of the Uiree companies, parties hereto, shall, without delay, be delivered to the pre: oITieers of the consolidated company, and the said books, records, and papers l)(i (lei'iiied and taken, as far as necessary, as the records and books of said confc \i« coiiW!k\\QAXffAkiMfnr i%» boatis of the laet-ntimed railway company at par. 312 U. S. PACIFIC RAILWAY COMMISSION. The president also reported a like purchase on behalf of this compai^ of 7y6L.___^ shares of stock in the Central Branch Union Pacific Railroad Company for $1,626,50^^^01 to be paid for, ouo-half in Kansas Pacific consolidated bonds at par, issued under tha__^^ mortgage of May 1, 1879, and the other half in Union Pacific collateral trust honc^^^^ at par. Oil motion of Mr. Russell Sage, seconded by Mr. F. L. Ames, it was Jicaolvedf That the action of the president in the purchases of the said bonds a^ii^^^^^i stock and each of said purchases bo, and each of them is, severally ratified and lu^ -^ . pro >. ed, and it is further ordered that all the said stock be held and registered iu t» ^3jk« namo of ISidney Dillon, trnstoe, and that the said bonds be deposited with the trer^^M. «.». uror of this company, which resolution was unanimously carried. There was presented to this company drafts of a proposed contract between it :^» v^ ^1 the Saint Joseph and Western Railroad Company lor a lease by this company to _X:»c hereafter executed, whereby this company agrees to accept a lease of the said &su m -Lit Joseph and Western Railroad on certain terms and conditions in the draft of '^-lL:ie sajd contract specified. On motion of Mr. C. S. Greeley, seconded by Mr. D. M. Edgerton, it was — Jiesolcedj That the president of this company bo directed, on behalf of this c«=:» v -^^' pany, to execute the said contract under the corporate seal of this company. Which was then and there executed. A like draft of a proposed continued contract for a lease of the Central Bra^L:M «2b Union Pacific Railroad and its leased, lines to the Kansas Pacific Railway Compxrm. v i,r was rciul, and, on motion of Mr. Cammack, seconded by G. M. Dodge, it was — Resolved^ That the president of this company execute the said contract under '^ "li<* corporate seal of this company. Which was then and there done. There was also presented the draft of a conditional offer to this company by 2^A. Jay Gould for the sale to this company by said Gould of $479,000 of tho first-mort^^^^f bonds of the Kansas Central Railroad, and of such other bonds as the said Gc»«:a id may hereafter receive from the extension of the road now being built, and for the«r<^ Ji- ditional oft'er of sale by him of two thousand five hundred and twenty-one sharcr^cs of the stock of the said Kansas Central Railroad for tho sum of f479,0()0. On motion of Mr. D. M. Edgerton, seconded by Mr. F. Gordon Dextor, it was Jicsolvcd, Tiiat said conditional otfer be approved, and the president of thi8C«>v^- pauy bo directed to execute an instrument showing such acceptance. The president of the company read to the board a communication and report d «fc'fc*?auy. Than3', to be styled the Uni*"' Pacific Raihvay Company, whiili articles were read at length. After consideration, on motion of Mr. F, L. Ames, seconded by Mr. Russell Sage, U was — J'otcd, That the president of this (company he directed to execute on behalf of tliw company tho said articles under the corjiorate seal, also any other necessary papors, eontracts, and deeds, and to do all acts necessary to carry the same into eftect. On motion of Mr. (r. M. Dod'^e, seconded by Mr. V. G. Dexter, it was — Jiitiolrcdf That whereas this company has ar(K'edin^ paper. J A draft of a contract and indenture between the Union Pacilic Railroad ConJpft**J| ])arty of tlie first ]»art, tin? Kansas Pacific liailway Company, party of tho 8ocr~»*any, party of the fourth i)art, iutendeil ^*' grant, bargain, sell, transfer, assign, and convey to the ]>arty of the fourth part,I> "■■""' suant to artiiles of agreement and consolidation t'le iiropertj' and assets of "^^^.^ respective parties of the tirst, second, and third i)arts as therein described, wasp ^JJ s<'nted for the action of this hoard, and on motion of G. M. Dodge, seconded by ^^ • F. }j. Ames, it was — f'oitd. That the j»resident and Kecretiuy oV t\i\ftco\\\\vAny do, on behalf of tbiaco vauy, and undor its coqiorate soal, exeviutvi Uvti wu(\. *iovi\.\\vvX ^\i^\\A^\^Wcft^«ad MINUTES OF MEETING OF DRNVER PACIFIC DIRECTORS. 313 otb^ docaments, papers, and iustraments necessary at any time to carry the said ^fisolidfttion into effect or ezecnte its provisions. Oa motion of Mr. Sage, seconded by Mr. Edgerton, it was — jd^M, That the six thousand two hundred and fort^-two shares of the author- l2^ capital stock of this company remaining unsubscribed and unissued may be Iggned, and the president and secretary are hereby authorized to execute certificates t1iei«A)r in payment of the first coupon on the consolidated bonds, and for other in- (Sebtedness of the company. On motion of Mr. Sage the meeting adjourned. A. II. CALEF, Secretary. A tme copy. Aitest: [COBPORATB SEAL.] ALEX. MILLAR, Assistant Secretary Union Pacific Railway Company, JIINUTBS OF MRBTIXa OP DENVER PACIFIC DIRECTORS, JANUARY 24, 1880. Meeting of directors. » Meetiogof the directors of the Denver Pacific Railway and Telegraph Company bddat t& company's office in the city of Now York, January 24, 1880, at 78 Braodway, Ktl o'clock p. m., of which due notice was given by the secretary to each of the dineton by telegraph, and in writing t^ each and every director of the company. PreaeDt: D. U. MofTatt, jr., Sidney Dillon, D. M. Edgerton, W. S. Clioesniau, C. S. Gweley, John D. Perry. Mr. D. H. Moffatt, on motion, appointed secretary. The resignation of Mr. Jay Gould, dated the 10th day of January, as a director of this compaDy, was read and on motion accepted. The president of the compuiy read to the board a communication and report, datem the of the l^onver Paciliu Railway and Tele^rraph Company in my office of a certain lution adopt'Cd by tlie board of directoi's of said company at an adjourned mee^mvsg o'clock p. ni. on tho 24th day of January, A. D. 1880, at 78 F " held ut 4 o'clock p. ni. on the 24th day of January, A. D. 1880, at 78 Broadway, l^*S'«^ir York. WitnoAH my hand and tho soul of the company. Done at Denver, Colo., this g-^>iU day of May, A. D. 1880. [(OFFICIAL KKAL.J * R. R. McCORMICK, Secretary Denver Poot/So Bwy. atid TtL No. 10 Wall Street, New York, Wednesday^ May 11, 18S OLIVER W. MINK, being duly sworn and examined, testifiec^K, tt followa: UNION PACIFIC PROFIT ON TREASURY STOCK. By Commissioner Anderson : (Question. You state at the end of your letter, as the result of y^^w- report, that tho Union PaxjiQc had made a profit of $3,716,961.48 om "tbe trejisury stock tliat you referred to. I i)resume by that expreais-^on " l)ro(it," you mean that that is the total of the proeeeds of that stoc:^ tf —Answer. The proceeds in excess of the cost of the stock. Q. Have you got that account made uj) so that we can see it? ^• The cost of tho stock is shown on the first or second page of my letC:^r. ('onunissioner Anderson. I call your attention to the fact that t *^ r,ost which you refer me to is the (iost of the Denver Pacific stock to 1 1^^ Ivansas Pacific Company. The Witness. Quite rij]fht, sir. Comniissioner Anderson. But the statement of profit is thei^rC^J^ of the Union Pacific Company in the transaction in question. They ^*^ not appear to rehite to the same money. Tlie Witness. It is the same. The Denver Pacific stock Lad b^^" turned over to the Union Pacific Company as successor to the Kan^^'' Pacific Comi)any. The consolidated company inherited the Den^''*'' Pacific stock. Commissioner Anderson. You mean to say that the account of *^''^ 39,98G shares of Denver Pacific stock, being charged with $750,000 ^ their cost price and credited with all the transactions you refer to. wot^^J sliow a profit of three million seve^ hundred and odd thousand dolli**^' The Witness. Precisely. (J. Have you made that account out in connection with your Jefct<^^ — A. No, sir; I have not. 1 can furnish it, though, without any d'^' culty. It is shown on the books of the company ; either on the book'* 4)t thc^ Union Pacific or of the Kansas Pacific Com])any. Q. Yon say, after having traeoA Uvc^ \\U^ of the Union Pacific Gova- ^uy to 43,VJ9i shares of Htock, ttvat ^^ Wve^e^ ^\\v\\^s^ w\^ v^R^^xk^v'f mi OLIVER W. MINK. 315 as foll^>'^8>* and then you state under date of February 1(5, 1880, that there ^^^as delivered to Mr. Jay Gould in payment for the following se- coriti^^ (which you there name), 34,641 shares of stock. From what ijQQt cEid you derive that information t — A. From the books of the Uniorm Pacific Company. Q, "VVhat particular book is that transaction entered in ? — A. It is on the jov^rual and the ledger — the first journal and ledger of that com- iiaDj* Q, IDoes that book show between whom that trausaetion was miulc f ^^ "S'cs, sir ; as between the Union Pacific Company, as successor ol the Kl^*^^8 Pacific Company, on one side, and Mr. Gould on the othtM*. Q. I ask, does the book show Avho agreed to those terms t — A. Not that ixwk ; no, sir. Q, What book shows how the terms were arrived att — A. 1 think the'r^*^3ord book of the Kansas Pacific Company. Q, rihe Kansas Pacific Company ! — A. Yes, sir. Q, Ihen your understanding is that the terms were arranged between ^jj^ Kansas Pacific Company and Mr. Gould before the Denver Pacillv^' gtocic ^as passed over and exchanged f — A. Yes, sir. Q. Do you know between whom, acting for and representing tlio Kans^^ Pacific Company on one side, and who, acting for Mr. Gould on the other, those terms were arrived at t — A. Only so far as is di8cloHe Co., tind KuiisaH •.'i: Nubmsku It. R. Oo., siueevonsc 'ito IliuBt. Jo& Western ItiiilrondOuntpittiy »l par," lint it d [■,in to statu nil nmoiint. Tliu Witness. No, h'iv. (JornmiHHiunor Anderson. Uiilcas litis prior figiiro to^kts to il Tli« Witness, 1 tliitili it does, UumiiiixaioiK'i' Anhebson. Your judi<:iiioiit is that tli« lij^uroe 742,(U refer to tlio ninomit of tlio securities descriUod utter tbcse wliicli i liavoreadt Tbo Witness. To those following, as wctll ns tboso preceding Q. Have you added them up to see I — A. No, sir. Let me t letter a niomeut, aud I think I ean explain it. Commissiouer Anderson. We will talie your explanufciati not The Witness. The $I,83.*I,724.o;i is made up of the face valm Saint Josepti aud Pacific boudn, the ICansaH and Nebraska bon the Saint Joseph and Iiouver Cityreeelver'seertiflcateH. ii- Cau you give us the distribution of those different uecuritit 'hey are set out in detail in my letter. Q. They are set out in your letter! — A. Yes, sir. onda, and 4,000 shares of the atook bridge thrown in." Does that appear in your letter as being alfi ured to Mr. Uould at the same time! — A. As being received fr Gould ; yea, sir. (i. l>o these miiintcs contain any referonee to the other 8© cuiimerated in your letter as having been received from Mr. C the Hastings and Grand Island and the Kansas OenCral t — A. I know whether the Hastings and Oraud Island are referred to t not: I do not i-ememtwr. (jommissioner Anderson. I thought yon were more familiarv minntes than I was, and yon would find it more quickly, — A. I think the Hastings and Grand Island is referred to s]ieciDcally minutes, except an it may be embraced in a pltrHsu at the closi last resolution, which reads: " Other iridebtcduess of the Compi Q. The point of my inquiry is this : Do you understand that t rant for this transaction, this exchange of tie Union Paciilo st tlio securities enumerated in your letter, was an arrangetnent tb l>oeii consummated between the Kansas Pacitlo Coni]>auy and Mr before the consolidation T — A. I do; yes, sir. II. That is what you understand! — A. That is my uuderstam the matter. Q. But yon are unable to say by whom that was uegniiated on if the Kansas Pacific Company with Mr. (iouldt — A. I am not _iy by whom the negotiations were c-utertHl into. I Q, You cannot t«ll usT — A. No, sir; I cannot USW yon. * Q, Yoii never hennl Mr. Gould say i — A. No \ I never li never ]^^ OLIVER W. MINK. 317 Q <^;£nio rciK)rt to the E^anaas Pacific is iiuulo by Mr. Sidiiiw I>illon 1 — K ^tM ^ president. ^Yj JJ>id yon ever hear hiin say how that arnui^oinent hiul biHMi niailo ^wL*^»^n Mr. Gould and the Kansas Pacific t — A. Not to my recollection. A xJ^ve you any knowledge of the value which these securities that ^ ^-^ceived from Mr. Gould bore at the time the}' were received by thec4:>'"P*°y^~^* No, sir. Q XJ[ad you any knowledge at the time t — A. No, sir. Q^ Xs it not true that the essential feature of the cash receipts by the Uuio** Pacific Company from these securities was derived by a negotia- ^Q^ of the Saint Joseph and Grand Island bonds after the reorganiza- tion i^ ^^^ ' — ^' ^^y ®^^ 5 ^^ some extent. Q, ^0 interest had ever been paid on any of those bonds, or the un- derlyi^^ bonds, until after the reorganization I — A. Not in cash. QOn the Kansas and Nebraska and Saii^ Joseph and Pacific ? — A. I -! i\ panyi whom the bonds were sold. Q, Wjls it not all done through one office 1— A. I cannot tell you. My impression is that the bonds were disposed of in the market. • KIDDER, PEABODY & CO. Q. Was not that entire issue sold through Kidder, Peabody & Co. t — A. I cannot tell you ; the books will show. Q. The whole issue became $7,000,000 ?— A. Yes, sir. Q. And the interest of the Union Pacific, by the dittert»nt changes, Ijail reached $3,500,000, or that vicinity ! — A. About four-scvenllis, if I nfcol- lect rif^ht. Q. Aboat four-sevenths of the whole issue? — A. Yes, sir. Q. lu order to effect that negotiation, what did the Union Pacific do m order to sell the bonds 1 The Witness. In order to make the sale of the bonds f Ooinmissioner Andeeson. Yes, sir. A. I think the company did nothing, except to enter into negotiations with brokers and make the sale. Q. Did they not, as a matter of fact, guarantee? the interest on the whole issae of $7,0(KI,000 ? The Witness. At that time f Commissioner Axdebson. Ye.s. A. No, sir. Q. I mean, have they notf — A. They had before that time; yes, sir. Q. They gaaranteed the payment of the intenr.st before thi? sah-, and then they sold the issue? — A.* 1 believe that is right ; y«-s. Q. 8o that, in order to satisfy yourself that the Union Pacific |ja:4 DMde this profit, itmust turn out that they will io.se notliiug by that gnarautee! — A. Precisely. Q. Aud if tbej shoold* lose anything by that guarantee it might lie A very disastroos negotiation ! — A. Ye.s. sir. Q. What are the present earnings of the Saint Joseph and Grand Ubodf— A. They amount to more than enough to meet the interest on these fltst mortgage bonds and also on the second-mortgage bonds. Q* How much are the second-mortgage IxmiLs ! — A. tl,OdO,000, at 5 pereent 318 U. S. PACIFIC RAILWAY COMMISSION. CONSTRUCTIVE MILEAGE. C j. Do you kuow what constrnctive mileage is allowed to that roa if any t— A. I do not; there is very little interchanged business wi that lino on which such allowances are made. The constrnctive mileai in this case amounts to almost nothing. Q. So the main feature of its business is local business? — A. Ve largely local. Q. You say, on the whole, that road makes enough to pay the in on the first and second mortgage t — A. Yes, sir. Q. JIow long has that been true t — A. Ever since the reorganizati I tliink, except as to the first half year. Q. Then it has been true for the last half of 1885 and all of 18SGV A. All of 188G, certainly. Q. What was the date of the reorganization f — ^A. I think it wat& ^ u May, 1885 ; I am not sure. Q. Who was the president of the company f — ^A. Mr. Jauics IL Ifc m^ mi- edict. Mr. JouN F. Dillon. I would like to ask him one question. Tlie Chairman. Certainly. By Mr. John F. Dillon : Q. As a consideration for this guarantee^ do the Union Pacific 0<=^ sn* pauy have a running agreement with the Saint Joseph and Grand Isla"^^"^ in tlie nature of a lease, covering the whole period of the guarantees A. Yes, sir. I desire that my letter, and the minutes furnished by' in connection therewith, shall be regarded as given under oath, and ^ part of my testimony. DODGE AND nUMmREYS' EEPORT ON TUE ADVISABILITY OFKAI^fc^-^^ TACIFIC CONSOLIDATION. le In (joniiectioii with the letteriibovc referred to, I now produce a (^^~^ l**^ of the rej)()rt wliic/h is referred to in the minutes of the prococding"^ ^^ the (liferent e()in])iinies, bein^i: a report on the ailvisiibility of the <-^^^"' solidution, made by C M. Dodge and Solon llumphreys, and embraces *l> a letter from Jay Gould, lUissell Sage, F. Gordon Dexter, Elisha -^^^' kins, Fred. L. Ames, and F. IT. Baker. It is its follows: New Yokk, January 10, li^Jrf^^ ' MussiH. Jay Gould, Russkll Sage, F. Gordon Dexter, Elisha Atkins, FrkJ-'^-' Ames, E. II. Baker: (Jen'tlemen: Wo jickiiowkulpje receipt of the following letter, signoil by i'oii- i*'"' dated New York, Octobi^r '2'A, 1871) : ** General G.M. Dodge and Solon Humphreys, Esq. : "Gentlemen : The undersigned, directorH in tbo Union Pacilic and in tbo K*^* **"* Paeilie Railroad Companies, eonceiving that a cousolidation of these conipauies i-* ^-^- «'<|nital)le conditions will promote the interests of each as well as those of the pn**-^ ■* ' j and knowing yonr familiarity with the problems which such a 8thysical conditions of the roids are about the same, their earning capacity being about equal as compared with their indebtedness, and with the strong conviction of thoso who operate the two Goperties of the beneficial results to be obtained from operating them as one, we ve concluded to recommend to you that they should be consolidated, in accordance with their charters, upon the foUowiug basis i"^ The new company to be known as the Union Pacific Railway Company ; that is, the Union Pacific Kailroad with a stock capital of ^36,702,300, and the Kansas Pacific Railroad, including the Denver Pacific Kail wav, with slock capital as follows : Kans:is racifio $10,000,000, Denver Pacific $4,00(),0()i>, making a total of $14,000,000, shall be consolidated into the Union Pacific, with* a stock capital of $50,702,300, aud the stock of the Union Pacific Railway, after the consolidation, to be issued for the stock of the Union Pacific, the Kansas Pacific, and Denver Paciiic Kailroad, share for share. The Union Pacific Railway would then represent a mileage of actually constnictiM I md operated road of 3,746 miles, or less than $14,000 of stock per mile, controlling and developing a territory now in its infancy, the growing business of which and itsrapid development have astonished every one. Its future biLsiness no one can now safely predict, but it is beyond question that such a consolidation and such a corpora- tion woald control as uiiiny, if not more, miles of paying road than any other in the lisrld, and would have a strength, character, and ability for future growth and dsTelopment unprecedented. Tmsting that onr consideration of this subject and our conclusion thereon may BMt yonr approval , We are, gentlemen, very respectfully, yours, G. M. DODGE. OuVER W. MiXK. SOLON HUMPHREYS. Mr. Leo. You sent for me. lu case you want nio to morrow, will you oblige me by making it after 3 o'clock t I am alone, aud busy. Mr. John F. Dillon. If you want to hear Mr. Gould to-morrow, Im ^) come at any time. U. I I'ACinc HAILWAY rOMMTSHION. I .!omuii«»iioiii)r AndeeSon, Mr. SaRB nent as won! i f wc \ _ totliiy be would como to morrow. Mr..JuHNF. 1HI.I.ON. You wnnthiniflrstl CoiriiniSHioutn- Andrq»on. It is not material, but imdertliosed titiiuces we tlioiijiht we would ht'ar him to-morrow. Mr. John R Uillon. Mr. Gould in goiug to movo into the L-omiti; and ho would mtlier uttoud to-morrow. C'oiiiinissioner Andeeson. I would rntlicr licar liiiri ftfl«r Mr. t Wu will buvv a piililio bghsiou at II o'i;loi.'k. The (Jommissioii then at^ounicd to Thursday, May 12, 1861, ] Xo. 10 Wali^ Sthbet, New Yomc. Thursday, Mny Y£, '" CominisHion mut purMuaiittn a(\juunim<>iit, all tho ('u ig preseut. casfol PI' % GIOVANNI V. MOKOSiNI, being duly sworn and examiucd, tes.^ as follows : By OommiHKioiiei: ANDEUSON : leBtioii. What is your occupation ! — Aiiawcr. 1 am a baukiT. Have you dealt iu stocks Ir-A. Yes, sir. A)i a brokur tor other persona f — A. No ; I urn nut a bruber. Q. liaveyoii btrouabrokerl — A. 1 havebeeiiapartunrof Mr.QcnU^ you know, when ho had this broker's firm. Q. When was that I— A. From 1881 to December 31, 188.1 Q. Who were the members of the firmt — A. Mr. Gould, his (George), Mr. (Jouuor, and myself. Q. Where waa your office T — A. The Drst office was at 'Si Nossa Ktreet. Then we moved to 80 Broadway, and then to 71 llroadwajr. Q, When did yon move to 80 Broadway I — A. I think we muve«l fj 1879. ^ Q. Wereyoaat8UBi-oadway at tbetimoofthecoDHolidatiun the Utuou Pacific aud Kansas Pacific Itailroad Companies t — A<; 80. (Jl. That was in January, 1880 1— A. I think «o. CONCEEHING THE ACCOUNT HOOKS OP W. B. COMSOE d(f [uploy6s of that firm who h What were t he names of the o ikst — A. Mr. Scgur. Q. tlive Iiis full name. — Answer. A. G. P. Scgur. Q, Where does he reside I — A. 71 Broadway. ii. What was his position ! — A. Jle was the book-keeper of H Q. Who was the cashier T — A. lie was the cashier also. Q. What other book-keepers were there? — A, We had Mr.M (J. Give his full name. — A, His name is P. L, Mathee, I tlitll' Q, Whore does he reside f — A. 71 Broadway. Q. At present T— A. Y'es, sir. Q. Who else was in your office t — A. There were a lot of boys ; bi^ Ihey hikil nothing to do with the books. Q, Those were the only responsible clerks that yoa employed t GIOVANNI P. MOROSmi. 321 Q. lo 1880 what books did your firm keep t — A. We kept ouly the firm's books. Q, What books were those! Please enumerate them. — A. The daily purchase and sales of stocks, the cash-book, and the ledger. Q. Did you keep a blotter t — A. We had no blotter. It is the pur- chase and sales book. Q. Have you those books that you kept iu 1880 1 — A. I do not know aoythlDg about that ; I had nothing to do with that. Q. When did you last see those books f — A. I never used to see them. I never bothered myself with the books. I hail nothing to do, really, with the purchase and sale of stocks. Mr. Connor was the one that attended to that. He was the broker of the firm. Q. Mr. Washington E. Connor I — A. Yes, sir. Q. Who had charge of the supervision of the accounts f — A. Him- ; 8eir. Q. Mr. Connor t — A. Yes, sir. Q. Where is Mr. Connor now t — A. 71 Broadway. Q. Is he there to-day, do you know f — A. Yes, sir. Q. Do we really understand you to say that you never have heard of these books or anything at all about them ! — A. Oh, I used to see th6m but I never took any notice of them, because 'ray work was altogether - different. Q« When was your firm dissolved t — A. December 31, 1885. Q. When it was dissolved was there not an ascertainment of the rel- k ative interest of each of the partners from the books t — A. When the . 5"^ was dissolved we divided what there was to be divided among the [ finj. That is all. Q« For the purpose of seeing whether that result was correct or not \ Sr ^^^ bave occasion to examine any books or accounts whatever f — A. ***®y used to give us a trial balance at the end of the year to each of ™ partners. That is aU. lool* ^hen did you receive your last trial balance! — A. December 31, Q' You received it first just about that time! — A. Yes, sir. ^' ^ot afterwards ! — A. No, sir. , "• Since that time where have you transacted your business in the "V-time!_A. 71 Broadway. g' And Mr. Connor also at 71 Broadway ! — A. Yes, sir. ^* Iu the same room! — ^A. In the same old of&ce. ^* Has he continued substantially the same kind of business that he n:*^oing before! — ^A. With the exception that instead of having Mr. Q^^ as a customer and partner he was doing business for other people. ^jT' J^o you know whether he continued his accounts in the same books it l^ you had in December, 1880! — A. I do not know anything about ^ »>ecaiige I have nothing to do with the firm. I only have office room in th "^^"^S ^^ ^^® room, did you ever see the old books of the old firm Op^t xoom ! — A. No, sir. back /^^ y^^ know what kind of a mark those old books had on the Q^ V^ ^ suppose they had the year. ^^ -C^id they have the initials of the firm on the back!— A. I sup- QQ^ -^ave you never heard Mr. Connor say what has become of those Q^^'l^ — ^A. No, sir; I have never asked him. ^ou have talked to him about it!— A. No ; I never did. 822 V. 8. PACIFIO SAILWAT- Q. Toa have been examined in anotfaar Miik wbeva fluMe boobim referred tof— A. I did not have the booka. Q. I know you flid not have them; bnt lamnowaAingyonwiMhtf yon spoke to Mr. Connor abont them at that time t<— A. Mr. OoBMriai m Europe then, don't yon see. Q. Have yon never epoken to Mr. Connor since aboat the 8iiiit-4. No. sir.' Q. Never mentioned that yon liad been examined and that thaiy both- ered the life out of yon abont those books t— A. He simply smiled mi it did not go any ftarther. '^OHILDLIKB AND BLAND.'' Q. << ChUdlike and bland I" Yon did have some Uttle talk with Ha abont those books f — ^A. I may have had an inflbrmal talk, yoa knot { but I do not remember what I said to him aiiout them. Q. Did yon have an informal tidk with Mr. Connor more ttian OM abont those books f— A. No; I only told that I had a good dalot trouble about those books ; that is alL Q. And he smiled f — ^A. I suppose he did. Q. Did Mr. Connor tell you he did not know where thoee books A. No ; he did not say a word. Q. Did you ask him whether he knew where the books wsce No; I did not Q. Ton did not feel any ourioslty to find out f— A. No ; I did noUtf^ anything about it Q. Did you ever say to Mr. Gk>uld tliat yon had been asked akoOL^ those books f — A. Mr. Gk>nld was there at the time. He knew it sttb^ time, yon know. Q. At the time of the trial t — A. Tes, sir ; at the time of the trial Q. When you got off the stand did you and Mr. Gonid talk aboca* that suit t — A. No. Q. Ho did not say any tiling about itt — A. He is a man of very fe*^ words, you know. Q. Bat still I ask you whether you said to Mr. Oould at that tint^y or have at any time siuoe said to him, that you had been troubled aboat those books, and referred to that matter in any way in talking to Tt^* Gould t — ^A. Not that I remember. Q. Would it not have been very natural to say to him, " I tliink thoe® books ought to be found ? "—A. I tell you Mr. Gould is a man that don't want to be talked to unless he talked to you first, and as he nev^ brought the subject up to me I never said a word. Q. You were his partner ?— A. Yes, sir. Q. And had been his partner t— A. I know; but that is the kind ^ a man he is, no matter whether you are his partner or not. Q. I am only talking about your rights. You had been asked i^ public proceeding to produce books relating to transactions in whi^ you were a partner. Is that not so t— A. 1 know it ; but I could find the books, although I hunted high and low for them. Commissioner Anderson. Of course not, if you would not ask question of the people who knew whore they were. The Witness. Of course Mr. Gould would say he did not know a thing abont the books. Q. How. do you know he would say that T— A. Because he wasi himselfl GIOVANNI P. MOROSINI. 323 Q. How do you know he would say tliat to you !— A. He did not Kay that to mo, but be said tliat in court. Q. llow do yon know but what, if you had asked liiiii oil' the stand, he woold have told you how the books could be found f — A. I did not askbioi that because I thought there was no use to a^k him. **NOT AFRAID OP ANYBODY.'' Q, Are you afraid of Mr. Gould t — A. 1 am not afraid of anybody. Q, Why did you not ask him, when it was your public duty, to dis- doae where they were t — A. I did not know anything about the books; 1 never saw them. When they were taken away, I did not know what they had done with those books ; I had no means of ascertaining ; 1 recollect that Mr. Vanden^oel, who was my lawyer, sent me in one of those spare rooms where they had all the old books, boxes, and every- thing thrown in there, to find them, and I looked for a day and a half and I conld not find any trace of them. I exhausted every means in my power to find them. Commissioner Anderson. It does not strike mo that you did, if you did not ask Mr. Connor and Mr. Gould. The Witness. Mr. Connor was in Europe, and Mr. Qould did not know anything about them, any more than I did. OoDiDiBsioner Andebson. I questioned you as to what you asked Mr. Connor when he came back, and it api)ears that there has been no ef- ibrt to find them. The Witness. Mr. Connor simx)ly smiled, cind did not say anything Q. Did you ever ask Mr. Segur where those books were!— A. Mr. Segor said he did not know anything about them. Q. po you think those books flew away by themselves I— A. I do notunagiue any such thing; but I could not find where they were. Q. Do you not know, as a matter of fact, that those books could only be removed by direction of some one who had authority to give the order!— A. I know ; but I do not know who gave the order. Q. And you did not care to ask the only persons who could give the ofto— Hr. Gould and Mr. Connor ? — A. The matter dropped then, and t did not care to bother my head any more about it. Q. Has your business in dealing with stocks been extensive ? The Witness. Do you mean personally or for the firm? Commissioner Anderson. No; the other w^ay. Have you had large tnumctionst I will pass to another subject first. Uave you the trial bahnees which you used to receive from time to time ? — A. No, sir. Q. They are hot in your possession at all ? — A. No, sir. Q. What has become of themf — A. They would have only a trial I babmoe, and show it to us, and then we would give it back to the book- keeper. Q. And they have gone with the other papers of the concern ? — A. I n|q[M)6e8o. Q. Has your business been extensive, on a large scale ? The Witness. Do you mean personally ? Commissioner Andebson. No, I mean for other people, in buying and riliog stocks. The Witness. While we were with Mr. Gould f Commissioner Anderson. Tes. A. We only did business for Mr. Gould ; that is all. , S. PACIFIC RAILWAY COMMISSION. Q. Wisro tlio onlura tliat yoa gave large and fVeqiionl jftve any orders ; it waa Mr. Connor, the broker. Q. Were yoa not aware of tlie orders when tliey were rm regive^WH I ^^^B Q. And of tlio different tranaactioiiBt — A. No, ^^^P (j. Did you never bear of the amount of stock that your firm ' ^^^buying or selling! — A. No, sir, Q. Mr. Uould was not a member of tbe Stock Excbaiigot — ^A. ! only Mr. Connor was a member; tbat is alL ; (j. Tben, in all yonr transactions tbat went throagb your books^ cordiugtotbemlesof the Stock Bxchange,your firm received Itieni commission of OTie-eighth of 1 per cent. !-^A. Yes, sir. Q. You vere tben directly interested in knowing the dimeasioiii these transactions T — A. I knew that we dealt in so many ebares, , 1 did not go into any particulars. Q. 1 am not asking you for particulars, l^ouly ask if you knew tj the business was large. — A. Bometimes it was large, and 8omeli| tboro waa nothing to do. ; Q. Are you familiar witb the mode of conducting operations ou j Stock Exchange T — A. Yes, sir; I am. i (J. Do you remember tbe facts connected witb tbe consolidation tween the Union Pacific and the Kansas Paoifict — A. I have an in tinct recollection of it, Iwcause I ha*l no direct interest in Uiia tbi don't you know t OONCBBNINQ THE CONSOLIDATION OP THE KANSAS PAOlPia Q. I know that; but do you recollect when it ha{>i>euedT — A. K )o not. I Q. Do you recollect the occasion T That is to say, what talk tli^ was about ft T — A. I beard tbat they were going to consolidate, bnt tl waa outside of my sphere. Q. We will go outside of your sphere for a little while. Hoff Iwfore the thing occurred was it that you heard '" A. I did not bear it, except immeiliately before. ii. Just the same day, or a day or two before . ,, cisely that ; but I heard indirectly that they were going to cousolfiUl but J (lid not know anything about it. t). From whom did yon hear that tbey were going to consolidatej A. It was tbe common talk in the ofQco. ' I Q, In your office! — A. Our ofilce, you know, was at^oiuing tbe [Tid Pacific, and I beard either a day or two before that they were goiogj coi>Bo1idate, but 1 cannot be precise at>ont that. Q. Did you hear Mr. Gonid talk about it! — A. No, sir. Q. He never spoke about it! — A. Not tons. (j. And yon, of course, ueverspoke to him about it! — A. No,alr. (j. Because he had never spoke to you I Did you bear Mr. Conj talk about it! — A. No, sir. Q. Whom did you boar talk about it! — A. If I heard anybody tl k'lig about it, it uinst be the Union Pacific people. Q. Can you give me some names I — A. I cannot recollect that. (J. Wbichof the Union Pacific people did you know! — A. I knew lam and bis brother; and I think Mr.Caltjfwaa tborutheu; I lave beard indirectly that thoy were going to consolidate. Commissioner Anqebsok. Yoa do not mean to tell us " 1/kcd at all! P^ \ little while. IToirldj i) it was going to oc43ar1 I. brof — A. I can't HM p| late. ustbMlM OIOVANNI P. MOROSIKI. 326 r[]ie Witness. It may have been biin, bat I cannot be precise. Q. Did yoa hear Mr. Ames talk about it f r[he Witness. Whom do yoa mean ? Commissioner Anderson. Mr. Frederick L. Ames. Or do you not loiow him t ^. I know him, bat I do not believe it was he ; he came there very seldom. Q. Do yoa know that shortly before this time, and during the sum- - iiier, there had been large quantities of Kansas Pacific stock bought vhich yoar fLrm had in its books ? — A. I do not recollect ; and I do not ; beheve it was so. Q. Do you know the Kansas Pacific road ? — A. I know it. Q. Do you know the stock ? — A. I know the stock. Q. Do you know its securities ! — A. Well, I am not very familiar, ex- eeptlknow there is such a road ; that is all. Q. Yoa say that, as far as you can recollect, there werq no shares* of Kaofias Pacific stock being carried for Mr. Oould on the books of your firm at this time t — A. I could not swear to that ; I do not remember. Q, How about the CJnion Pacific stock t — A. He had considerable Union Pacific stock; but that was paid for; it was not on the books of fheflrm. Oommissioner Andebson. I only want to get at where the securities, the shares of stock, were. The'WiTNESS. He had this Union Pacific stock in his own vault, and that was paid for ; it was not on the books of the firm. Q. Where was his vault t — A. It was in the Stock Exchange vault. Q. In the Stock Exchange safe-deposit vault ? — A. Yes, sir. Q. Yoar firm had nothing to do with it? — A. No, sir. Q. No access to it t — A. No, sir. Q. How then do you know that ho had Union Pacific? — A. Because I knew that he was a large holder of it, and he had it in his own vault ; I know that. Q. From what he said? — A. No; because sometimes I used to go to the vanlt with him, and he would give me some of that stock. Q. To use for his transactions ? — A. Yes, sir. Q. Did he never give you Kansas Pacific stock I — A. No, sir. Q. Do you remember the fact that there was a meeting held in the sommer, after the consolidation, for the purpose of ratifying the con- wlidatiou? — ^A. No, sir; I know nothing about their meetings. Q. Do you remember the fact of signing any paper yourself in regard to tiie ratification of the consolidation ? — A. I do not see what I IkmI to do with the ratification ; I was not a director of the company. Q. Were you a stockholder of the company ? The Witness. The Union Pacific ? Commissioner Anderson. Yes. A. No, sir ; not that I know of. Q. Did you hold a power of attorney from any stockholder ? — A. Not that I know of. Q. Do you remember signing any paper relating to the ratification f — A. Well, I have signed a great many papers in my life, but 1 do not remember signing any paper about this ratification. " Q. At whose request could you have signed papers of that character • without knowing what they were about ! — A. I never Higneil any paper \- QDless I knew what it was about. \ Q. lask yon again to recall in your memory wUelVi^t ^ow Av\vii^ ^M paper approving of the consolidation betweeu t\\e.\5\uo\il?«»*fti me II. 8. TACIPIO RAILWAY COMMISSION. Riiilrood Compauy and tbo Koueiw I'tunflc liailrowl L'unipuuy amli Denver Pacific liailroad Company, iind whether you did nut sign ti paper as the bolder of 20,1>4U ohui-es of utock. Tlio fact may posj firing it to your mind. — A. I know there wam hiilf a ebare in niy am Q. How abont tlie 20,(H1 in your naniet — A. i do not remeou about that. I Q. DoyoH think anyliody eouhl give you *3,(HH),000 worth of stl without your reinemberiDg or knowing anything ai>out it at this tiaioj A. Honietimeu they put Htiwks in the name of {)eople that dn not txjf to tliem, just for (tonvenience ; but 1 do not reeollMit. Q. What I nm nHkiiig ynii alwut In, wlietlieryou Mgntnl a paper i| your hand and wrote your name. — A. I may have done iti bat 1 da remember. You see, I conhl not swear to it. Oommistiioner Andbrson. Mr. Holmes, do yon know where the og liml of the ratification is; in it in the oRlceuf tlie company at BotttoO) Mr. Hqlues. I presume bo. I do not think 1 ever »aw the ori|rini|| Commissioner A^dkbson. Please read tliis jiapw which I ttfaow x on page 86, marked No. 1240, and say if, after reading it, you l)or the transaction. I indicate whore your Datue appears. That paper which you Higued. Read the heading of it and see what It is you sigueil. 1'ho WlTNKSS. I tell you I may havo signed — thviy might have d that in my name. They might have ])ut Ihat t^toekln my iiam«jaiit]j eonvenieuee, uud i forget all alwnt it. { Q. Wlien you say ■' they might have put that stock in my uaBie," j whom does that personal i)ronoun "they" refer! — A. l»uppoHelld Mr, Ooiild, beciinse Idiil not owu the slock. 1 v ta ^^^Uie that this was a <»>nsoUdatioii of the two roa*ts for tlie mutual lied ^^^K of them, and that I had better sign it. 1 ^^^B Q. Yon say again " they." I sii|)pose you me:in t)ie Hamu poiwiiJ ^^^■l Yes, J ^^^F^Q> Every time you say "they" do we nudcrKtaiid yon lo mean 1 ^^^Bonldl — A. Mr. Ooiild and his tViends titatowuedllie stock, Idlilj ^^^^wn the stock. ^ ^^^^ (J. When you signed that pajwr did you make any invcstigatiDM rcganl to the terms of the consolidation, to see whvtheroraut tlmu mm Pacitic was a paying roadt — A. I may havodoneit at thetUno^l J do not remember. ^ Q. Do you remember doing auything about it, reading any booku examining the roads T — A. Weil, 1 suppose they had some remlBn passed, and they gave it to aie to read. J Q. Do you know whether or not the Kansas Pacifle ('onipany at tfl me was a paying concern T — A. I do not know anything al>ou't it> J Q. And yon did not then ! — A. I only hennl that the oonHOliilatI for the benefit of both roatis, on aocount of provenling the cuttirij ites. And it was a giwxl thing for both of the mods. That ia all. ] Q. Fi-om wiiom did youheiK this I — A. From the talk there iutlio^ Boo of the Union PacilKi. Q. Irt that all you have to sav in regard to the knowledge you i .|iiii-cd liefor." «i;.'i.ing this piipt-r *— A. Tliutisall. ^ (J. Is ii. Kilt (III.' UmI. yefore signing them, you would naturally ask what they were for, if you did not happen to know what they were for? — A. I knew it wsis for stock purchases. Q. Who would bring the checks f — A. One of the boys. Q. Who made out the body of the checks f — A. Several clerks; some- timeR one and sometimes another. Mr. Segur, for instance, nseo you know what has become of those checks ? — A. I suppose they have pot them ; I do not know. You know they accumulate very fspidly, and I do not know what they did with them. Q. The check stub-books are with the other books of the concern ? — ^ I suppose so. Q. You do not know anything al)out them I — A. I never interested inyseir to look up the details. Q. AVhat bank did you check on ? — A. On the Fourth National Bank. Q. Was that the only bank ? — A. Yes, sir. Q. That was the only account you kept!— A. Yes, sir. Q. Did you not keep accounts with trust companies? — A. No, sir; not for our business. Q. What safe deposit company did yon deal with; the Stock Ex- ehange Vault? — A. The Stock Exchange Vault. Q. Your firm had a vault thore f — A. We Inul a vault there. Q. And substantially all the rJiecks, of any amount, exclusive of those that were given for otlico. expenses, were checks that were given in the trunssict ions of the firm in the purchsise of st^iks and other imn'tiea f-^A. Yes, sir. ^^028 IT. S. PACIFIC TlAmWAT COMMISt^ION. (J. Amiyoiir ouly cnatouipr was Mr. Gould f — A. Tes, air; wcl nay, half n dozen custouiGrs onUkle of liini, bat they did not amouii ^^JDj-tbiog. ^^^L-Q. Bo tUut 111) thu largo checku uiid amounts uhargcil in that acco ^^^Bb may assume to havo been charged iu transactions in which ^^Hcuild was intoresteil 1 — A. Yea, sir, ^^BCommissionor Anderson. Wg ciiii got the acvountfl at the bn ^Hnyway. ^^m By tbo Chairman : ^^" Q. nave yoa any other inrurmatiou to give the Commission I- Niine that I know of; they bad better ask him. Q. Ilaveyouanysuggestionstbatyou desire to make! — A. No; lli no 8uggo8tious. Tlio legal talent before me is no gre^tt Ibat my sag, [tions would not amount to niudu ^ Oumniiasiouer Andur^^on. The statement that Mr. Calef " talked a most uHtonniling suggestion I have ever henrd of. O. r. MOKOSIN No. 10 Wall Street, New Ydbk, Thursday, May 13, 188 \ NATHANIEL NILE3, being duly aOlruietl and examined, t«sti B follows : Ity Oommisaioner Anderson: ^Qiie^lion. At the time of consolidation of tbo Union Paciflo ftnd tBnsos Pacilic you were, I believe, a Government diructort — Ansi ty imprension is thu litiul eonftolidation took place iibortly aflw ^m expired. I cannot give tlio exact date of tlie expimtionof myti rofUce. GOVERNMENT DIRECTOR IN 1879. I Q. When were you a Goverument director T — A. I think, the ca ^rt of 1870. Q. How long did yoii remain such director? — A. One year. Q. Dnring llie term of your office, what examination of the nfCuin this (souipany did you wake, if any T — A. 1 attendeil the meetiU|^ the board of directorx. I had access to the hooks of the main otQct Itoston. It would be difllcult to recall the details of the exaiuiont niiule at that time. Q. Were you a member of the committee of the board I — A. Yc* (J. Of what committee I — A. The executive committee, 1 K'lieve; 1 not (juile positive. oyou remember being there when the articles of consolidation were signed t— A. I do. 0* I>o you remember being there when the consolidation was voted t — ^' I do. Q« Still, the consolidation was an event of great imi)ortanoo to the ^Jnpaiiy. Oan you not ascertain from your memory whethet ^soa^r^B* I^^^sent or not at the meeting f— A. I remember t\\at 1 "ovM ?^t«mdlV 1>PI 8. PACIFIC RAILWAY COMMI88ION. PEBBBNT WSEV COWaOLIDATION WAS TOTED Fl Q. WasitiiotyouriinpreKtiioiDtttliatlnuctLftttliH iiitereat.. , Fniinvut wiu) a guoa ileal involved in tLoiiiii-stioiiuftlilHuoiisolIi I mean tliat it woe it Berious queKtion to cxiiininv, hh tu wlii^'tlier it wa huvu a liiirtfnl or Iicueflcinl eftwt on Hit- (iovi'ruiii«iit'« security — My opinion auaii indirirlnal was tliat it was tor the tieuclitof tlio Un Pacihc roail that It Miioiilil bo coiisoliilated. (j. Wu8 it not your opinion that tlio Hnbjt'Cl was a grftvfi oiw tmA ijiiirod considcrablo oxamination in orrlHr Ut roacli tbat conRltwion' A. Ill K'siionil ternie, job, (J. Did yon know how much stock of the KiiiiNas VatMr. and of I Denver I'aeifle was being taken into the syHtein by the corisolldntlt -A. I cannot say that 1 did Idiow the exaet nniouitt. Q. Did yon know how much of additional burort and say when your term of ofUci- expii^ Look at this and say whether you were prewnt or not, and whethwn voted in favor of it. — A. It appears from tho minutes of Juiiuaryl 1380, that i was prcseut;i8 (lovernmcnt direet*»r. i (J. And yon are satisfied that the fact reported, of your iireseocOj that meeting, is correct T — A. Ves ; and that I was a member of tb« i ecutive committee and not of the ilnance committee. J Q. Do yon recall tho fact that Mr.Ohadwick was also present HtU meeting 1 — A. I do. j Q. Do you recall the fact that he voted against tho coneol)ilMi4M , I do not. ] Q. Do you remember whether there was any discussion iii whtcbJ lOk part or expressed any views adverse to the consolidation t— J remember that there was a discussion. Whether Mr. Obodwick ti part in it or not I cannot state. Q. Do you remember the fact that Judge John P. Dillou was p and read the articles to the meeting t — A. I believe ho was present read the articles, (,>. Do you remember whether nnv exjilanation was niatle at ttiAt iig to the efl'ect that the $4,0IH»,<)l)0of Denver I'Mcifte slmk i/(J to Mr, Jay Oonld \ii oxelvAwtf* *^*>^ wvtftin seoiiritJes HJj(i) and Western, or ttw l!ic\ivv\aV.sv \w^^\ ^\v(»»aft,OT *xia' I KAtHAHI£L KILES. ^^1 imid you know that Mr. Frederick L. Ames was interested ? — A. 1 riid not. Q. I>id you know that Mr. Dexter was interested !^-A. I did not. Q. Or Mr. Atkins ?— A. I did not. Q. Or Mr. Kussell Sage !— A. 1 did not. Q. I3id you know that at this time Mr. Sidney Dillon was also the president of the Kansas Pacific ?— A. I probably did know at the time, bat I oannot remember now whether that was the fact or not. Q. Was not your vote very largely iniluenceil by the advice which you received from these other directors who had given the subject a great deal more .attention than you had, and by the fact that they were advo- cating^ the consolidation? — A. As 1 now remember, 1 was id you go further, and examine the gross and net earnings of the company f — A. That wasa partof the consultation had withMr. Smythe and discussed otherwise. Q. Did you find out in these examinations that all, or nearly all, of the aecnrities of the Kansas Pacific Eailway were in default at the time of this consolidation ? — A. I cannot remember the details of what I found, bat I remember the conclusions arrived at. RIVAL INTERESTS HARMONIZED. Q. Assuming that you went to the bottom of this matter, and found at that time that nearly all, if not quite all, the mortgage bonds were in defadt in the payment of interest, and that by the consolidation the Union Pacific would be chargeable with the duty of providing for the payment of this interest — assuming that you found all these things to be tnie, what induced you to consent to this consolidation! — ^A. One great inducement was that imi)ortant rival interests were harmonized, and organizations under many heads and many ofiicers and many sal- aries would be consolidated ; that there would be a single organization and harmony where various interests had previously been in conflict. Q. Is it not true that at and immediately preceding the date of these articles of consolidation, there were friendly relations between the man- agements of these two corporations, and that they had some sort of a traffic agreement, and that there was in fact no great conflict between them I— A. I cannot state the exact condition at that time, but I knew that in the nature of things there would always be conflict under sepa- rate managements. Q. Did you know the market value or the real value of either of the several classes of bonds or of the stocks of the Denver Pacific and the Kansas Pacific companies at the time you signed these articles of as- sodationt — ^A. I cannot, at this distance of time, state in detail what my knowledge was in regard to the value of the separate securities. Q. Assuming that all these securities, perhaps except the first land* grant bonds, were depreciated and below i)ar at that time, and the in* terest defonlted on them, and assuming that %14,WMj(M0 qI \bi6itodL 332 U. S. PACIFIC RAILWAY COMMISSION. Commissioner Anderson. Gastavus B. Smythet The Chairman. George B. Smythe, I suppose you mean f The Witness. George B. Smythe, of Des Moines. Q. How often did you see Mr. Smythe in regard to this matter!— A. He discussed the matters with me whenever he was in this city, and when we were in Boston together on the affairs of the company. Q. Did you not also rely on what Mr. Frederick L. Ames told you!— A. I cannot remember that I had any conversation with Mr. Ames ou the subject. Q. Or Mr. Sidney Dillon t — A. I may have had conversation with Mr. Dillon, but I have had no recollection of any. Q. Did you have any conversation with Mr. Solon Humphreys !— A. I cannot remember having had any conversation with any one member of the board of directors, except the Government directors. But the subject has been discussed where a number of directors were together. Q. Do you remember seeing a written report made by Mr. Solon Humphreys and Mr. G. M. Dodge on this subject f — A. I remember see- ing a report on the subject, but whether it was the report you refer to or not I do not know. Q. Please examine the paper I now show you, and see if you recol- lect it as the paper yon refer to. — A. I cannot state. Q. Do you recollect the fact that a report was made by some persOBS, at the request of some of the directors, as to the desirability of con^^* dation f — ^A. I remember examining a report or reports. Q. Were copies of that report furnished to the Government dir^^^' ors f — A. I do not remember. Q. Was the existence of such report, and the facts stated in sucl^ J®' port, the subject of any discussion among the Government director:^ ^"^ A. In my conversations with Mr. Smythe some reports were discus* s^^^J' and all questions bearing upon the consolidation, but what the rc]^ '^^^^ were I do not now remember. Q. Did the Government directors have an organization of their c^^^^' with a chairman, I mean ? — A. They had. Q. Were you the chairman of the Government directors ! — A. I ^^?^ appointeil to draw the report. I suppose that carried with it thecl '■*'^* manship of the committee. Q. Did the Government directors keep a minute of the proceed J"*^^ of their meetings when together ? — A. They did. Q. Who kept that minute? — A. Mr. Smythe. Q. Do you know where it is ? — A. I do not. Q. Have you read it? — A. I saw the minutes at the times they ^^^^^ taken, but I have not seen them sinc^. ^ Q. You have no present recollection of their contents! — A. 1^ ^^"^ whatever. Q. Nor can you give any suggestion as to how we can see thei procure them f — A. 1 cannot, unless from Mr. Smyth e's representati By Commissioner Littler : Q. You were appointed by the President for the purpose of loo^^ '^'^'*^^ particularly after the interests of the United States Government iii^^^ \ management of this Union Pacific road, were you not! — A. I wat — ^ ^l^' pointed particularly to fill the oflice of Government director. Q. And by the terms of the law the Government directors specially charged with the duty of looking after the interest o United States in connection with the earnings and management o NATHANIEL NILES. 335 DOW, in a Keneral wtiy. I havo had no occasion to i-efer to tlieni for seven years. Q. Did you bavo occasion to refer to the decisions of the Supreme CVmrtof the United States rehitive to the relations between the Union X^aciflc Bailroad Company and the Government ; did you know of them s^t the timof — ^A. I read them all. Q. Do you recollect reading^ the decision as to the Union Paciiic and Credit Mobilier case, in which the Supreme Court of the United States decided that the Government had no interest in the stock of this road, and that its only relations were of a secured creditor, as specified in the acts of 1863 and 1804:! — A. I remember reading the decision and all the papers io that case. Q. Do you recollect the provisions of the Thurman act, that the Oovemment reserve 25 per cent, of the net earnings of the Union Pa- cifio Bailroad, to be determined in a particular manner! — A. I remem- ber it very well. Q. And that whatever might be the expenses or charges against the company, subject to the payment of operating expenses and fixed in- terest, they did not come out of the Government! — A. That was the fact Q. Did yon know, at the time, that the Kansas Pacific was also a road which had been aided by the Government with bonds, as well as with lands ! — A. I did. Q. And at the same rate, so much per mile ! — A. I did not. Q. Was it not $16,000 a mile on the Kansas Pacific!— A. $10,000, I believe. Q. Was it not $10,000 a mile on the Union Pacific until you reach the mountains, and then was it not more ! — A. It was scaled. Q. Was not the bonded obligation of the Union Pacific very much heavier than the bonded obligation of the Kansas Pacific ! — A. Yes, sir. OBLIGATIONS OF UNION PACIFIC. Q. And were not the first mortgage obligations of the Union Pivcitic correspondingly greater than the first mortgage obligations of the Kan- sas Pacific! — A. That was the fact. Q. Do yon recojlect the difference in the stock obligations of the two companies! — A. I cannot state now the difference in the stock obliga- tions. Commissioner Andebson. If the witness does not recollect this, there is nothing gained by the questions, as we have them all before us. Mr. John P. Dillon. I do not care to i)ress it, then. I wanted to sbow the state of this corporation. I think it is demonstrable that, however stockholders might complain, the Government profited, beyond any question. The Witness. 1 am sorry that my attention w as not specially directed to tlio subjects upon which the Commission would like testimony. It is a very broad subject, and my mind is refreshed constantly by discuss- ing it. I will say this, that the action of the Government directoi-s, especially my own action, was influenced by the fact that no action of the board of directors could intervene to injure the security which the Government had for the payment of its obligations against the com- pany. By Mr. John F. Dillon : Q. Ton knew, at the time, how far it was from Omaha to Ogden, I ftapposet— A. Yes, sir. I II. S. I'ACIFIU ItAlLWAV COMMISSION. I'Q. U» joii now ruuolluct huw far it. in from Oumliu to O^deiit—A." tgct tUo exact iiumber of miles. !■ Mr. John F, Dillon. It ia a matter of goograpliy ; it in about 1,03 ' miles 1 The Witness. It is. Q. You kucw at tLo time, at all ev^ents, the approximate distaod from Kaiisas City, the iuitial point of the Kansas Fiicific, to Denver,, suppose 1 — A. Approximately. Q. And the diotance from Denver to Cheyeime, where the DaavJ PaeiKo counccted with the Union I'uciflc I — A. Yes, sir. ] (j, As I i-ecall it, tho distance between Omaha and Ogdcnisl^O] miles ; that is tho only point of the Hue of the Union Pacific, as you undQ stand it, on which the OoTernment h:ul any lien, is it uotT — A. Il understand it. ' GOVEBNMENT LIEN. Q. And that the Union Pacifie^as recited in the articles of consoUt tion, hud an on tstandi tig stock obligation of about $30,000,0001 — A. jj that time; yes, sir. * Q. You do not recollect the amount of bonded indebtediiese ! — A^ do not. ' " Q. That is a matter of history; but whatever It was, there was ccjiiivitlent amount of the flrst-mortgago indebtedness prior to IheG^ cniment claim, as yon recall itf — A. I do so remember it. (J. The Kansas Pacific, including the Denver Pacific — assuming I4 to be, as it is, about "io miles from Kansas City to Cheyenne Cotumissiouer Littler. Abont C38 miles from Kansas City to I>i ver; it ia about lOG miles from Denver City to Cheyenne [continuing i qnestiou] had a stock obligation of (14,000,000, had it notl^A. C: not remember the exact amount, but about that sum. Q. Ten million dollars on tho Kansas Pacific, and 44,000,000 ou l Denver Pacific, with a first mortgage ahead of the Government only the 304 miles; do you recollect that, or did you not know it at 1 lime? — A. I did not know it at the time, but I cannot more tiaat recollect tho figures now. " (j. Yuu heard the articles of consolidation read, i suppose, at ( meeting t — A. 1 did. , Q, Among the provisions of ^hose articles ia this: "Article 10. B now company hereby formed does not herein assume any separate or] dividual liabilily to the outstanding debts, obligations, and liabilltl of ihu respective constituent companies, whose several and separated jstcnce a» to third parties shall continue as resi^ccts such debts, obJin tiuns, and liubiiitios of every kind and nature, shall continue, Rtitvia standing thtve articles of union and consolidation." I ask you if lln was read! — A. It was. J Q. Do you know of your own knowledge of the admiuistrutiouortl afi'airs of this road, as respects the Government, since the date of Coj solidation ! — A. Not since my term of office expired. 1 Q. Do yon recollect that tho Thurman act, which made a reiiniRitU of 2rt per cent, nf the net earnings, was an act which applied only to tl Union Pacific and to the Central PaciflcT — A. I know that the act | —.provides. - Q. And you, as Government director, wore a director only Of ti ^Dioo Paci&cUailroad,and it did not apply to tbc Kansas PaciflflT— fBB. I 'Q. Do yoii recollect that tlic origmaX xw^wVYtixw-ittt of t\Ksa o NATHANIEL NILES. 337 ^f^ to pay to the Ooverument, not 25 per cent, of net earnings, but only 5 per cent. T — A. I recall sucU a provision. Q. As a practical question, assuming that the Union Pacific wsts, at the date of the consolidation, the stronger company, and that under the arrangement with the Government it was a secured creditor, and there- fore it was not in the power of the consolidated comi>any in any way to fedocetbe amount which, in any event, would go to the Government, would not the effect of that consolidation be that the [Jnion Pacific would impart whatever strength it had to the Kansas Pacific, and the Government be benefited thereby, and in no degree injured I How would that strike you a« a practical question ? — A. Most decidedly, the Goveniment would be benefited ; the policy pursued by the directors of the Uuion Pacific road in this consolidation, and in building feeding lines, has, in my opinion, preserved the value of the security held by the Government on the lino of the road. By Commissioner Andekson : Q. Will you please tell me what you mean, when you speak of the Government security! — A. I moan the obligations which the Govern- ment has against the roaer annum 1 — A. 1 know that whCu it paid (livideuda it had a oral less competitors for the business which then supported it thnd has now, Q. Do you know that it diex! this company was paying from 7 to 8 per cent, di^-idends on its stock) A. I cau only testify from the re|>orts made at the time ae to the qi) tion you have asked me. | Q. Can yon explain this to the Cumniission how that company co at any time have paid dividends on this stock, and at the same tj fail to pay the amount required uf th»in by the terms of ttie Tbonl aet ! — A. I am not prejiared now to answer tliat question in detail. ' ^pu desire an answer I will refresh my knowledge of tho subject i Bdve you the best information 1 have, < B^ By the Chairman: F Q. Do I understand you to nay Ihut you first heard of the codboU tion tlie day before it took )dacef — A. No, sir; I did not intend to I Q. What day wn'.t it! — A. I said a short timu bvfore the fcQ. now long bclon; the consolidation 1 — A. 1 stated i poiiths. It may bavo been longer than that. ^Q. Did you write tbo report! — A. 1 did. Q. I call your attention to ttie fact that the report is date ber 4, 1870, Just see if that is the correct date, or whether it is t dated or not. — A. Tbo report is datrd at the time it was flaalljr 4 ^ttltteepartnieot would show the exact time. I know it was some time gfter tbe personal examination of the road-bed that I prepared tbe re- port Q. When did yoasnbmit the report to the Governineitt t — A. I pre- same it was about the time the report bears date. Q. Yon refer to the consolidation in that rei)ort. Was it from your knowledge at that date? — A. My knowledge of the consolidation be- gaoyfts I have stated, perhaps two or three months before the consoli- dation took place. Q. Then, when you wrote that report, you had knowledge of the con- solidation!— A. I so state in the report. Q. Well, you must have had. Did you not then regard it of sufii- cient importance to iuform the Government in detail of this important step in reference to consolidation! — A. I considered it very important. I suppose that I was put there to act. Q, Act how ! — A. For the interests of the Government. Q. Do you not presume the Government wanted to know how you were acting! — A. In what was done in regard to the direction, I sup- pose I represented the Government, and was the Government to the ex- tent of my action, and that I was appointed to direct, in common with the other Government directors. The Chairman. Please read all the report that you made to the Gov- ernment on the questiou of the consolidation in the year 1879, Decem- ber 4th. REPORT TO GOVERNMENT. The Witness. I am not prepared to say wbat reference there is in my report in regard to the consolidation further than this: <' During the last year the Kansas Pacific Eail way has passed into the control of this company, both roads having the same general manager and the same sop^ntendent of telegraphs." The Chairman. That information must have been based upon your conclosion fifty days before the board of directors had voted! The Witness. I cannot state the time more nearly than I have when I first had information of the proposed consolidation, or why the report had a special date. Q. Have you any further suggestions to offer to tbe Commission with reference to your course as to the consolidation, or any other general matters! If you cannot make them now, we would be glad to have them in writing, or in any other way in which you will present them. — A. I do not think at this time of anything further that I can say for the ben- efit of the Commission. I have expressed my opinion as to the consoli- dation, and the reasons for it, and the reason for my action in voting for the consolidation. I think of nothing else that I can add to it at present NATHANIEL NILES. No. 10 Wall Street, New York, Thursday^ May 12, 1887. fiUSSELL SAGE, being duly sworn and examined, testified as fol- lows: By Commissioner Anderson : Question. What is your occupation! — Answer, I am^i boi^ukftx wmI ^^kerand merchant u. ». pacific; railway commission 0 ! — A. I (to not roiiR^inlicr l)i4{ila<3Ui it Ja so BQ. Wlierois yoiiruiliwiiowt— a. ilBroatlwny (q. Wberc was your office in 18801— A. 78 and 80 Broatlway , Q. Tliat Ih tLu eaino bailding wbeto lUe Uuion PaciHc otBces were k, TeH, sir; tbo same baildiiig. Q. Tliu same building where Mr. Gould's offices were at tlie t)mcl{ A. Yea, sir; »t that time. I Q. How long have you been a banker imd broker! — A. More twisuty years, Q, Uo you do buHiuess solely for yourself, or for tlie accouut of ot customers also! — A. Mostly for myself; occasioually for otIiclL. II Q, Do you keep books of your tratmactionsT — A, Yes, sir. Q, Ilftve you a book-keeper ! — A. Yes, air. Q. Wliutis his nameT — A. Charles W. Osborne Q. Is he with you HOW I — A. Yes, sir. 1 Q. At youp office, 71 HroadwayT — A. Yes, sir. Q. Was ho with you in 1880 1 — A. 1 thiuk not; I tbiiik became me in 1S82 ; but 1 am not positive aa to the year. I Dud on examil Itioii he came to me January 1, 187 1. F Q, Who wag yonr book keeper iu 1380 f — A. 1 think Mr. Itoardta tL \V- Oalwrue wasjo my employ then, and I think Mr. Neihber, ■Jo sir; I bought at diftereut times. I bought $100,000, and I think I took » second lot. I tried to sell a little to some people here to interest theru iu aiding the road in which I was interested. I w^as looking for feeders for the Missouri Pacidis system. Q. Did you deliver these securities when you bought them to the managiug committee, of the pool!— A. No, sir; I took them and put tbem in my safe until they were disposed of. Q. ilow did they get entered in the details of this pool ? — A, The pool was bought out. They were separated. That was bought directly from the pool. I had nothing to do with it. Q. YovL had nothing to do with the pool until it was fully dis- charged f — A. No, sir; never had a 10-cent piece in the pool. Q. l*hen, I understood, as the pool was originally formed, there being some Sa.int Louis people and some of the Union Pacific, that the Union Pacifio people bought out the Saint Louis people, and that after the pool was terminated and liquidated, then you made certain purchases f — A. Yes, sir; I took an interest in the purchase. It was ottered to me at the oost price, and I purchased it to protect my interest in other cor- porations. Q. What cx)uuection have your purchases, that you refer us to, with this pool t — A. Nothing, only a continuation of the interest in the Kan- gas Pacific propert}*. Q. A.t)d it was a continuation between yourself and some other per- sons wlio had been in the pool before ; is that the case f — A. The most of the persons retained but a very small interest. I understood Mr. Greeley retained some interest, and some of the other parties also that were in there; but, as the securities advanced, they did as most people do— they realized and sold out. Q. Had your purchases anything to do with Mr. Greeley's interest or Mr. Holmes's interest, or Mr. Jay Gould's interest in this pooling agree- ment?— A. No, sir; as I say, I believed it was worth what I paid for it, and it \^ould protect a large interest which I held in other corporations. Q. In other words, you both had the same interest in bettering the pro|)erty and advancing the securities, and, as you were both pursuing thesanae road, you bought on your account and they bought on theirs f — A. Yes, sir ; I never bought any security with any other view in tliat road or* in any other, than to benefit them. Q. Ill regard to the securities that you purchased, were you entitled to the benefit of this liquidation to the consolidated bonds at the figures stated in this agreement! — A. Ido not recollect this agreement. I presnmel was treated just as others owning like securities, and no better. Q. Were they purchased before the consolidated mortgage was made, or afterwards ? — A. Before and after, both. aOULD AND SAGE, TRUSTEES OF CONSOLIDATED MORTGAGE. Q. Do you remember the consolidated mortgage f — A. 1 do. Q. Yon are one of the trustees named ? — A. I am. Q. And Mr. Jay Gould is the other ?— A. Yes, sir. Q. By the t^rms of that mortgage, is it not provided that the difGBP- ent bonds and securities of the road shall be converted into bond tfAClKIl.^ RAILWAV COMMISSION. [ t>(r iu tW svoiirlUvs tyitl onned (lieio all llie way tlmnig I un IHI owiior «tni. ii. Il»w wvro tliosG ruti?i3 iletermiued that ure Sxe«l iu tb't» oc [ (litlctl miirtKi)iji-,uf which yoti area trnsteef — A. Tbey were Ibew ^ of H fiuutiii«»iuiKT ANDBKson. Uo you irmenbrr tlw MtUs Oat] [ deil the rutMt Mr. Holmes. Nus. 22, 23, aiul 24. I thinlE ttiat is It. Q. I am inquinii^ now in rrgHnl to :ivctiuo 33; yva my Ikm [ w«^tv tb4> sut^t>cl of ivtukli'Rttih* dvUittf !- A. Tcs, sb^ J Q. IMwwMi wh»t iwrwtisl— A. Botwwn clw partiH hi fRtoart Iwnt iulnutvO with tlw-sv. i do out ■a>«v«f7naB thMhuia I «wt «MM4iUdifl^Kataecari]inL Jaat Bfcaa r! irgiaiiatiiaaf ^to4»B»Mi^aaJI ~ " i frt it apoB a v^gmg bana. r2ZL III II. IIBI 1^ tW vksti^ tt WW baltar ftraB partiaikiMlaailara ocaMM •( Ite Ml ibat Talaa ar eadi amtilF. « tiUwa aoiaawa ttatk aaJ aiaBrawa Ma— gHaawa tit} waaa« Jaw ifcanaiiarfMa^Mj Aa attaafttil m all ia teyiag » anivatt aaiAiAHSM?arftaiftai4 RUSSELL SAGE. 347 AN EXPLANATION GALLED FOR. }. Please explBin, then, the meaning of this sentence at page 156 of 3 record : ^^And whereas said company, in pursuance and in further- ^ of such resolution, has contracted with Sidney Dillon, Russell ^ and Henry Yillard, the holders of $784,000, in amount of funding ids, $754,000 in amount of second land-grant bonds, $75,000 in omit of Leavenworth Branch bonds, $G7,000 in amount of un- bmped income bonds, $2,071,400 in amount of stamped income bonds, i also $454,000 in amount of first mortgage bonds of the Arkansas illey Railway Company, guaranteed by said Kansas Pacific Railway »iDpany, for the exchange and conversion of the entire amount of e bonds held by said Dillon, Sage, and Yillard for $3,400,000 in Qount of said consolidated first mortgage bonds." My question is, explain how you reconcile the statement that all your purchases era for your individual account, though with the same geneml object I the other purchases, with this statement in the mortgage that the idirities I enumerated were held by you and Mr. Sidney Dillon and i, Henry Villard ? — A. I have not had my attention cjilled to it. It gome years since. I think it was probably the result of what was ftof the trust bonds and securities which were held there by these utieB. Mr. Holmes. The Saint Louis pool. The Witness. Yes, sir ; the Saint Louis pool. That is my recollection ' it I mean, anything I purchased outside of a private character is ated on this account here. Commissioner Anderson. I understood you to say you had not 10 iDts interest in the Saint Louis pool. The Witness. No, sir; it was that pool before I purchased these cnrities. I was not a member of it. Q. Did you ever have an interest in the pool! — A. No, sir. Commissioner Anderson. Pleaseread^/mf to yourself again, and ex- ain it. See if it will not recall to you the facts. The Witness. I do not remember about that. Mr. Holmes. Mr. Sage was substituted in somebody else's place. The Witness. I said, previous to the purchase of the securities that mention there in my account. Q. My question is, after the purchase of those securities, haersonal interest in those secarities, or in the (3,400,000 of bonda Qitt vere to be paid for them t — ^A. I do not remember all the Sjfares, bat I know Mr. villud and Mr. Dillon and myself were there trying to ad- just these matters and close them ap, and this was the olomng up at tbe end of it. Q. Innderstand; bat what I jtm now asking yoa is whether yon re- oeired any of that 93,400,000 of bonds T— A. I do not remember. Commissioner AnsEBSOir. We will fiHrgive yon if yon had a n^ioa of them. — A. I do not want to be for^ren for auything I have done. Q. Yonr present recollection is that you hM no persoaal interest ic it I — A. I have not thooght of it before, I say, sinue the transae^oK*^ nntil this moment here. Q. Yon say yoa were an active member of that committee t— A. met there with them; yes, sir, daily. Q. Will yon t«ll me how yon asoertalned who the persona were _ were entitled to that $3,400,000 1 — A. I have not got the record of: I gnesa Mr. Ham most have It I think he kept the record of tlie ■mi—-' inga of the committee. Q. Do yoa remember whether he presented to yon any reoocd sbo*^^ * ing who was entitled to these bonds 1 — A. Of ooaise he did. Q. Yon think he did »— A. Yes, sir. Oommissioner Aitdersoit. Yoii were the trastee of tbn nioricagv^^!> and the bonds were to be delivered to yon and Mr. Dillon and Mr. y» u- lanit The Witness. The securities we got for all those bonds Mr. Oalv-K^'^ must have for tbe trustees. Q. Why Mr. Calcf f— A. These went right' into the hands of tkM ^^ Mr. IlOLMBS. Mr. Oalef has kept their account, as secretary, since. ■— ^• Q. Mr. Galef has kept the accounts as secretary of the trustees of tbJC -^ consolidated mortgage T — A. Yes, sir. THE $3,400,000 BONDS. Q. I am now talking of the disposition of tbe $3,400,000 of b(»ic^ -'^ which, by the section i have read to j'oii, were to be issued to yonrsefi^'^'^ and Mr. Viilard and Mr. Dillon, iu payment for these Becaritiea- - J* ~^ They got the securities for the bonds. Mr. Calef mast have those bone^-*^ for the trnst. Q. These securities were delivered I — A. Yes, sir. Q. And the bouds were issued T— A. That is it. Q. To whom -wore these $3,400,000 of bonds delivered I— A. To tl"-^** persons who owned thene securities. Q. Did tboy receive them immediately from tlie company, or did tii- ^^V receive them from the committee T — A. I do not remember as to tb^ -"^ at this moment. Commissioner Anderson. The section which I read to you reci^'' tei that the said company has contracted with Sidney Dillon, Bussell 8 and Henry Viilard. Tbe IViTNESS. Yes, sir. RUSSELL SAGE. 349 Oommissioner Anderson. As the liolders of certain securities, to pay tbem for these securities, $3,400,000 in bonds ? The Witness. Yes, sir. Q, 1 want to be informed as to who got the bonds and who delivered them to the real owners of these securities. — A. I think that by per- haps a little examination I can refresh my memory, and answer that more intelligibly than 1 can right oflF, for I have not thought of it since i the transaction was closed up. Q. You say you think Mr. Ham did lay before tlie committee a state- ment sbowing the persons wiio were entitled to these bonds, and what their relative interest in these securities were ? — A. I wont be sure that it was Mr. Ham, but of course there must have been such a presentation to OS or we would not have acted upon it. , Q. Yon would not have distributed the bonds ? — A. No, sir. Q. Xor i>ermitted them to be distributed?— A. No, sir. Q. You say that you were not personally interested in these securi- ties, as far as your present memory serves, and Mr. Henry Villard has made the same statement. Can you tell me who were the owners of these securities f — A. I cannot recollect the thing; it was so many years ago. Q. Do you not recollect the fact that ^It. Gould was interested in them!— A. I think that very likely he was. Q. And Mr. F. L. Ames? — A. I do not remember distinctly about it. I am not positive, as it is eight or nine years ago. WITNESS' DUTY AS A TRUSTEE. Q. As one of the trustees of this mortgage, was it not your duty to , scratinize the agreements that were made between the holders of the secorities and the bonds, to ascertain and supervise the rates at which the bonds were to be issued? — A. It was our duty to see that we got what was provided for in the mortgage, and we got them. Q. Was it not also your duty to see that the terms that were made for these particular people who were to receive bonds for these securities were not more advant.ageous to them than the terms offered to other bidders? — A. Certainly, that was so. There never was any i)reference given to any person that I knew of. Q. What examination did you make to see whether there were any preferences or not to the holders of these securities ?- -A. We made a proper examination at the time. Of course we were acting as a com- mittee, and we would not have been very likely to pass them without SQch an examination. Q. Did 3'on ever make such an examination ? — A. Yes, sir; that is my recollection about it. Q. Did you figure it out ? — A. Yes, sir. Q. You recollect doing that! — A. I do. I recollect our liaving the matter before us there and everything pertaining to it. Wo were in session several months. Q. You will perceive that all the securities enumerated at page 156 may be converted by the ra^es contained in article 2.3, so as to compare the amount that they were to receive, and which at pages 156 and 157 is specified at $3,400,000, with the amount they would receive under the ) converting rates provided for by article 23. Did you ever make that ' comparison t — A. I have no doul)t that we maanj'ing:it. 1 Q. Do you know how that rate of purchase, $3,400,000 Tor thc«u J ferent bonds, catue about T — A I do uotrecollect it now. An I eaidj fore, it is eight years aRO, and 1 do not carrj' any memory of if. I y got too many things to think of to carry anything of that kind witbj refreshing my memory. i Commissioner AndkhsoN. At this time you were a trustee of I mortgage t 1 The WiTSESS. Yes, sir. ( Uommissioiier Andkrsox And this was a large transattt Jon, by nil yon were to part with 13,400,000 of these bonds! The Witness, Yes, sir. Q. Can you recall between whomaiiegotlalioiiof thismftgniliidei conducted, and who fixed the terms that were to lie paid for the a ties f — A. The committee ftxed the terms with tlie owners. TIIE COMMITTEE. Ij coll ML of m of ttllt I CO! Q. What is the christian name of the committee f— A. Villard, Mr. Sidney Dillon, and myself, I suppose. Q. Can you sijecify whiuh of tlioae thit'e gentlemen conduoled '. negotiation and reacheil tho conclusion that it w^ts about t3,400,fl6l)i A. I suppose it was the resnlt of a conference, the same as it woold with this Commission here, tho three gentlemen actin;; together. Q. Then we are probably going to get $3,400,000. Well, do you collect any such coufarencel— A. I recollect, iis I stated before, tl >we were there in session fn'qucutly on this bustuiuts ; daily. ! Commissioner AN»EuaoN. As a member of thia committee, yon n iBented the interests of the holders of these securities, The Witness, We repre«ented the interests of both, I suppose. Comiuisaiouer AnuERSox. You represented the interest, as a rneml of the committee, of holders of tbeaa securities. You were bound protect thorn and get the best terms you couhl. The Witness. We were liound to do jnstiee to them ; yes, sir; Di the company, as a trustee, and to the committee, who were the own the securities. ii. Uefore the aiuoniit had been fixed at $3,400,000, while you v serving on this committee, was it not your duty to see that the hol4 of these securities got the full market value of their securities la I .■settlement that was made 1 — A. I suppose wo must have come to t ooncUiHion, or else we would not have absented to it. Q. We will, take it botbre yon were named as the trustee In themj ige, when you were simply a member of this uonimitteo. Yon w It on that committee to represent tho holders of these seeuritlei protect those interests, were you not! — A, Yes, sir. ' Q. That was the object of your service as » member of that comt tee T — A. I suppose so, : Q, When yon became a trustee of the consolidated mortgage, wa/ not your duty, as trustee of the consolidated mortgage, to protect trust that was stated in the mortgage, and to see that no bonds w issued except on fair and e<]unl terms! — A. Yes, sir; that i« wUi supposed we did. RUSSELL SAGE. 351 MR. SAGE 3iIE£TS UIMSELF. Q. Tou say that yoa met yourself, as a consolidated mortgage mail, aodyoQ met yourself as a member of the committee, and that the ar- raDgement was made between the trustees and the committee t — A. No, I do not say that. Mr. HoL3fES. The record recites, between the company and the com- mittee a contract was made. Cominissioner Anderson. I have been endeavoring to get at how this gnaDgement was made and how the prices were reached. The record feads: ^^Whereas said company, in pursuance and in furtherance of gQchresolation." I will read the resolution. The resolution does not refer to the fixing of any prices, Mr. Ilolmes. Mr. Holmes. No ; it recites that the company had made the contract withtbese people. That was made before this mortgage was drawn. Commissioner Anderson. I will take Mr. Holmes's explanation as beiDg years ; that is, that the contract which fixes the price for the con- vereion of these securities, referred to on page 156, was made and ad- justed between the committee representing the holders of the securities, on one side, and the committee of nine of the Denver extension bond- holders of the Kansas Pacific Company, on the other side. Mr. BoLMES. The company was also a party to that contract, and it was in pursuance of that contract, which was a part of the plan and agreement of reorganization, that a part of the decree in the suit was incorporated into the mortgage as a part of the mortgage itself. Tbe Witness. That is it. Mr. Holmes. And the trustees of the mortgage were bound, by the terms of the mortgage, to carry out that contract. May I make a short jexpUnation. The Chairman. Certainly. Mr. Holmes. Mr. Sidney Dillon states that while the fact is that be purchased from the Union Pacific Company the amount of shares of stock stated in the letter yesterday, he was merely a conduit of title; that he purchased the stock above par, from the company, but sold it in oi)en market ui>on the New York Stock Exchange, and the proceeds of it were paid over to the company. Commissioner Andebson. We certainly will have occasion to exam- ine Mr. Dillon again, and he can make that statement under oath. Mr. Holmes. It appeared to be a personal, private transaction, but it was done for the company. Commissioner Andersoq^. I presume the prices stated in the letter will agree with the prices on the Stock Exchange. Mr. Holmes. 1 have no doubt of that. TheCUAiBMAN. We will excuse you, Mr. Sage, until 2 o'clock, and will DOW take a recess. afternoon session. BUSSELL SAGE, being further examined, testified as follows : EXCHANGE OF OLD SECURITIES FOB CONSOLS. By Commissioner Anderson : QocstioD. After you and Mr. Gould became trustees of this consoli- o yoti know the amount outstanding to-day t — A. 1 coiiM q fttiAwer that doflnitely. Q. Wji8 it about «14,000,00OT— A. More than that, I think. ,, Q. You are the trustee now !— A. Yes, sir. Q. Wlifttistheamnuntf— A. Hometl5,000,000, 1 lliink,orlon> tlh> conjtolidiilion, the subject thi' \vi1lidi;nv:il nl'«oriU' ol' (he N<.TitriIii's, which you held as trustee i| der that mortgaEe, being spoken of! — A. Not at tliis moment. Q. Do yon remember the fact that there were two schedulenamie. to your mortgage, one containing a description, generally, of tbeiiiq ei'ty and tlm otiier containing an assignment of certain stocks ton nuA Mr. Gonld as trustees T — A. Mr. Holmes says it was the licafj I'aciDu 8tock. He was more familiar with that perhaps than I am. Q. Ah trusteo of thnt mortgiigo, did you not become familiar with tl| sccnritieH that you beldf — A. Oh, yes, sir. Q. I'loase read the second schedule, and see if that rcfreshcti yi mind, ilave you posession to-day m trustee under that morl^gaj the securities enumerated in that Hchcdule ! — A. We have a liil^ ' ;ept hy Mr. Culof, under our diri'ctions, of all those things. ' DENVER I'ACIPIC STOCK. Q. Have yon got that Denver Tacific stock in yourpM day! — A. I do not remember at this moment, Q. Have you got that Denver rsit-iUc stock t — A. I could not BU8fl| that here. Q. Yon do not know I — A. I presume wc have got all the swurltl that were given to us, in trust, in the Safe Company, in the cbu Mr. Calel. Q. Do yon think you have got all the securities that werp origiod given yon in your possession ! — A. I presume wo have got all ffe^ elianged for, certainly. Q. (iould that 29.' 80 sliares of Denver Pacific stock havo been h out of your trnstees' pocket without your knowledge T — A. Ko, 1 it not. If they were put into the hands of our trust, where w those securities, we have them in the Safe Deposit. Comiiauy. tj. Do you not know to day, as a matter of fact, tliat that pro iias been taken out of .".onr tnistT — A. I have not had my attextf illed to it before, until this moment, for seveiiil years, and I a ■epared to answer the question that you are pnttiug to m«. Commissioner ANDKRSOfi. You are a trustee under t[ ' RUSSELL SAGE. 353 Tbe Witness. Ob, yes, sir. Coflin^isfiiouer Andebson. Auil, as such, you are re8ponfc.ible for the pTOi>erty in your possession ! The Witness. We are responsible under that trust deed, of course. Q. Have you never heard that your trust has parted with that stock by a formal proceeding and suit in court?— A. Yes, sir. That recalls it to my mind. You have explained it further and it refreshes my mem- ory. I have not given the thing thought for some time. Q. What do you recollect now t— A. That brings back to my mind that there was some legal proceeding in relation to that. Q. 'Sow I will go back to the starting point. Were you spoken to about that proceetling before it was instituted! — A. I presume 1 was. Q. It was a matter of some importance, was it not; twenty-nine thousand shares of stock that you were responsible for as trustee f — A. Yea, sir. Q. Who spoke to you about it? — ^A. I presume it was talked over and considered by onr counsel. We acted under the advice of our counsel, of course. Q. Who was the counsel f— A. I think Judge Dillon and Mr. Holmes. Q. Mr. Holmes would not come to see you about it. Mr. Holmes did ijotkDOw anything about the suit that was to be brought unless it was called to his attention. How did the suit first come up?— A. I do not recollect for the moment. Perhaps bv refreshing mv memory a little I can bring it all out. Commissioner Anderson. Mr. Gould was vour associate in this trust? The Witness. Yes, sir. f Commissioner Anderson. And you could not part with those securi- ties without conferring with Mr. Gould about it ! The Witness. Xo, sir. Q. Are you satisfied that you conferred with Mr. Gould about it before you let that stock go ! — A. I do not recollect the circumstances connected with it for the moment. Q. You and Mr. Grould were trustees under this mortgage, and held these securities for the purposes of your trust. Are you not entirely satisfied that before you permitted that to pass out of the hands of your tnwtyou and Mr. Gould discussed it fully ?— A. As 1 said before, it is some years since the thing occurred, andl do not recollect at this mo- ment the particulars connected with it. Commissioner Anderson. I know that, but I am asking you from yonr own I: ni>\v]od;r«*. T!ir Wrr.vj sii. Wo would not part with those things without, of coi:rsis ji-.dici.il aetiyii and under advice of counsel. ACTED UNDER ADVICE OF COCNSEL. Q And liof.iro instituting such judicial action you would confer to- giU.vr ns to iT'.stitoting itt— A. Undoubtedly. Q. Ai d you have no doubt but what vou and Mr. Gould talked it over before ihe suiti wasbrought?— A. That is my impression; yes, sir. Q. Who sent for Mr. Holmes!— A. As I said before, I do not remem- ber the history of the thing for the time being. I close up my day's bosiness, and I commence with the light of the next morning generally, and I do not attempt to carry transactions and details for nine years; and I do not think there is anv man around this table that can. Q. Do you remember Mr. Holmes coming to you and talking ov«r this 23 p R 354 U. S. PACIFIC RAILWAY COMMISSION. matter witli yon? — A. I have answered yon that I do not recollect the transaction. Q. You say yon do not recollect seudinp^ for him. I now ask yoa if yon recollect his coming and talking to youY — A. I do not think I did anything of this kind, without talking with him or Judge Dillon. Q. Were you served with a summons and complaint in this snitt— A. 1 1 hink I was. It slipped my memory, and I have never had occasion to refer to the thing since the day it occurred. Q. What lawyer did you employ to see that the thing shonld be done con^'ctly ? — A. My recollection is that it was the lawyers I named; Judge Dillon or Mr. Uolmes. Commissioner Anderson. Mr. Holmes was on the other side. The Witness. That is true. Mr. Holmes was on the other side. Commissioner Anderson. j\[r. Holmes was for the plaintiff in that suit, so that he could not have been your lawyer. The Witness. No; that is very true. Q. Do you not remember who your lawyer wasi — A. No, I do not recollect it now. The thing has passed out of my recollection. Q. Do you know Mr. Aaron J. Vanderpoel ! — A. I do. (i. Do you know Mr. Almon Goodwin! — A. I do. Commissioner Andeuson. I will state to you that it appears from the record tliat that linn appeared for you and lilr. Oonld. The Witness. 1 think it did. Q. Do you know at this time who was Mr. Jay GonUrs personal counsel ? — A. At tliis time ? Commissioner Anderson. At that time, in 1880. Tiie Witness. No. Q. Do you know who it is now? — A. 1 think he has several connseli I 8ui>|)ose so. Q. Do you not know that Mr. Vanderpoel has for many years heC^ Mr. (fould's pt»rson:il c^ounsi'l in many nutters? — A. He has l>een ^^ several nmltcis. .Mr. (rooilwin has. Q. Do yoii remember tiiat an answer was interposed in that suitf ^ A. 1 do not reeolleet the particjnlars. I liave not eharj^ed my memo^^ with it. I remejnber now, since yon spoke of it, that their firm did a ])ear for us. (Commissioner Andekson. M\\ Holmes, do you happen to rememb^ " who swore to that answer I Mr. I'OLMES. Mr. (Jould swore to it. Q. Do yon remember the result of that snitt— A, Xo; in part onl^ 1 have not refreshetl mv memorv about the thinir. if. Do yon not remember that a ileeree was made by whieh you ai^ ^ :\lr. (fonld were direete'l to part with that 2:),00i) shares of stock!— /"^ Well, I remember tiiat. Q. Is it present in your mind that that suit was somewhat more rapi i * than most liti;rations p'uerally are ?— A. Xo, sir j it is not. (^ Von do not rememl)er that .'—A. I do not remember that it waX'-^ more rapid than suits of a kindred character. let A5' Commissioner Andeijson. Vou have a better opinion of lawyers tha 1 have. The Witness. Well, I think if a case is properly prepared and t ;)a])ers all ;is they sliouhl be, that that was ample tWe, an he RUSSELL SAGE. 355 " The Chairman. And everybody agreed f The Witness. Tes, sir ; in half the time. Whether they agreed or not, if they got oat the facts and the law that governed the transaction, seven days was ample. Commissioner Anderson. I believe the Lord made the world in seven days, but I never knew a lawyer try a case in that time. The Witness. It takes more time than it does for us business men to do the business. By Commissioner Anderson : Q. What happened about that stock after that decree was made t— A* I do not recollect the history of the thing. Q. Did you not insist on being informed what was going to be done with the stock and who was going to take it ? — A. Wc simply insisted on knowing what was the right thing for the trust and for its benefit. That was the main thing that controlled me, I know. Q. Were you informed at the time you parted with that 29,000 shares of stock that your co-trustee under that mortgage had agreed to buy the stock for certain securities iu the Saint Joseph and Western road.f —A. I do not recollect the fact. Q. If you had been told that fact would you have permitted the trans- action to go through? — A. I would not, unless it was iu accordance with the advice of counsel and of the trust deed. Q. As a matter of fact, have you ever known a case where it was in conformity with the terms of the trust deed that the trustee of the mort- gage should buy its securities himself? — A. Perhaps I do not quite eomprehend your question. TRUSTEE BUYING FOR HIMSELF. Q. As a matter of fact, have you ever known a case where it was in conformity with the terms of the trust deed that the trustee of the mortgage should buy its securities himself; the securities which he liolds as trustee, I mean. — A. These are matters that are usually in- fiaenced very much by the advice of counsel having the matter in charge. Q. I am asking for your own opinion. You have been a trustee under a great many mortgages and have, held a great many trusts, Iiave you not ? — A. Yes, sir. Q. Do you hold the opinion that it is proper for a trustee to buy 9 property that he holds in trust from himself, and make his own bar- ^icain f — ^A. Not as a naked question, without there were other connect- ing circumstances and facts that would cause counsel to say that it was « proper act to do. Q. Then, if you had been told that Mr. Grould had arranged the terms on which he was to buy this stock that you held iu trust, you would have considered it your duty to have examined it with great care before part- ing with the stock. Is that not so ? — A. I should have been influenced very much, as I have just stated, by the advice of counsel whom I had confidence in, to investigate the legal bearings of the question and the proper disposition to be made of it. PURCHASE OF SAINT JOSEPH AND WESTERN SECURITIES. Q. When did you first learn that Mr. Jay CTOuId bad arranged to buy this stock for Saint Joseph and Western securities and Kansas and Ne- bnuka bonds t — ^A. I do not recall the time now, if ever. 366 U. 8. PACIFIC BAILWAT OOlOflBSIOV. Q. Did yoa ever hear of it before it was diaolosed on fhis ezanina- tiont The Witness. The second examination of me t Commissioner Ain)EBSONr On this examination by the Gommisrionl- A. I heard of it at the time, of coarse. Q. From whom did yon hear that t^A. I most have heard that bm oar counsel, Mr. Vanderpoel and Mr. Goodwin; Q. What did they tell you t— A. They told as the thing was the li^ thinff to do, and I remember telling them distinctly if it was right thiu and if it was for the protection of the property and in porsaance of dus trust, I assented tb it. Q. Did they tell yoa that this stock had been agreed to be sold to Mr. Jay Oonld ia exchange for Saint Joseph and Western secarities t^A I do not recollect what it was that wassaid. Iremembertheotiierpsrtof it, and I remember that they advised the doing of tbis thing, or ein I shonld not have done it. Q. They advised the suit t— A. Yes, sir. Q. Please confine yourself to this point. I want to know when yot . first learned that the agreement had been made by which Jfr. Croud was to get this stock for Saint Joseph and Western seooritieB I— A At 1 the time of the termination of the suit, of coarse ; of the acticm then m i daring the litigation. Oommissioner Anderson. It did not appear in the salt, I maysi well say. It appeared in the minutes of the proceedings of the bwd of (Urectors of the E^ansas Pacific. The Witness. Yes, sir. Q. I will read that minute to you in a moment, althoagh that doei not exactly disclose it. My question is when you first learned thattf^* Gould was to get this stock in exchange for Saint Joseph and Weste^ securities ? — A. I suppose it was at the time of the action of the boa^ and the legal action. Q. About this time ? — A. Yes, sir. Q. You say Mr. Holmes spoke to you about this at that timet— A« ^ think it must have been about that time. It must have been him ^^ Mr. Vanderpoel. I have not charged my mind with it since the tra»>*' action was closed. Q. Will you say that any of those gentlemen told you that it W^^ proper for Mr. Gould, being a trustee of this mortgage, to buy tt^^ stock in that way? — A. I say we were advised that it was a proper ^^ for the board to do, or else I should not have done it. Q. That is not the question. The question is, whether any count advised you that it wa« proper for Mr. Jay Gouid, being your associt trustee, to buy the stock which had formed a part of the property in your trust for himself, and to pay for it in securities of the Saint seph and Western Company f Was it ever said to you that that tra^:^ action was a proper one by any counsel ? — A. It must have been told us. I presume it was. That is my recollection. Q. When did you first hear that the consolidation project was on how long before the consolidation Y — A. It was talked of several monl before. Q. With whom did you talk about it! — A. With most of the dij ors in the company — the XTnion Pacific and the Kansas Pacific. WITNESS DID NOT FAVOB CONSOLIDATION. Q. Oenerally, as a desirable thing) to ioTmoii^^T^g»iVia.^YLof *i RUSSELL SAGE. 357 Vbte® ?— A. It was so reported by the gentlemen in the Union Pacific. \ vVid uot faror it myself. Q. When did it take definite shape, so that you knew it was going to lia]>pen! — ^A. It was late in the fall or early in the winter of 1879. Q, How long before the articles were signed, which was on the 24th of January I — A. January, 1880. Q. How long before that did you know that they were going to be AgneA T — A. I did not know, because I had not given my assent to go into the consolidation until quite late. I was opposed to it. My inter- ests were in another direction, as I said this forenoon. I did not favor &e thing. 1 preferred to hold the Kansas Pacific, instead of going into tire consolidation. It was a more growing property, and less incum- bered and less liable to competition, which hiis since sprung up and de- preciated its value. Q. Did you know when the order or direction was given to have tlie articles of consolidation prepared! — A. I cannot tell the exact time, bat I am very clear as to my own feelings. Q. I am not asking about that at present. I want to know whether yoQ kaow when Judge Dillon was directed to prepare the articles; how long was it before they were signed? — A. No ; I cannot state the exact time, but I know that it was a matter of discussion and consideration for months, and our Boston friends were very anxious to bring this about to stop an anticipated rival that would be very injurious to the Union Tacific road. Q. Aly only question is, whether you know when Judge Dillon was directed to prepare the articles! — A. I answer that I do not know. Q. ^^Tou answer so much more that the answer gets lost sight of. Were you in daily conference at this time with Mr. Jay Gould f — A. I will not say I was in daily conference ; I was in frequent conference with him axid Mr. Dillon. Their offices were on the same lloor of the build- ing wli ere I was. Q. X>o yon recollect, as a matter of fiict, that he told you that Judge DilloD was preparing these articles ? — A. Ho might have told me so ; I denote remember. PEEPABATION OF ARTICLES OF CONSOLIDATION. Q. IDid yon know that the articles were being prepared or drafted? — A. I clid not know until a very short time before the meeting; -perhaps a week or so. Q. Did you know it two or three days before the meeting ! — A. Oh, yes, sir. Q. Did you know it a week before the meeting ! — A. I think I did. Q. 'When the articles were being prepared, had yon given your adhe- sion "tlien to the plan f — A. Not at first. Q. Just when the articles were prei)ared, had you then stated that yoafsivored it T — A. I will not be i)ositive as to the day. I know the genex^ scope, the reasons of this matter, were discussed very fully. We regarded it as an important matter. Q. I am uot asking that. All I want to get at is when it had been determiDed, so that you directors knew that this scheme was going tbiough. How long before the 24th of January was that? — A. It may liave been generally acquiesced in ; perhaps it may have been ten days. and it may have been fifteen, and it may not have been more than ^ week. D. 8. PACIFIC EAILWAY COMMISSION. ^^^H Q. It took some litllu time to prepare tbese artides, did it uot!— A. Tou are a better judge of that than I am, as a lawyer. Commissioner Akderson. You say lawyers can do so much in seno days. The Witness. Yes, sir. Mr. Holmes. It depends upon the lawyers. The Witness. It depends upon the lawyers. I have found you to be very expeditious when yon had important basioess to do. Q. Did you ever see tlio articles before the 2Jth of January, or Ik draft of them !— A. Tes, sir. Q. On the 21th of January t — A. iSo; I will uot say that. laawtlieoi at the board there. Q. Ha:d yon seen the draft before tbati — A. I do not remomherof having seen the draft before. Q, Had you had discussions with Mr. Gould or any one else ae to some of the articles to lie placed in it} — A. 1 had discussion ob tbe general matter of cousolidatloD more than in detail. That was a oiitt- ter for the lawyers, and we blocked out what we thought ought to Iw embraced iu it, and then we trusted to our counsel to put them in foiiD- Judge Dillon did it. Q. Are you satisfled that one week before the consolidation veut thnmghitwassubstantiallyarranged among the boanl of diroctora tbHt it should go through Y — A. As I said before, I cannot tell as tt» a duy or two or three days, but 1 can state that the matters were under con- sideration there for several months before any result was reached. Q. What 1 want is your best information as to whether a week befoK the meeting was held so many of the directors had given in their >d- lierence to the scheme that you were satisfied it would go throngli, ioA knew it, — A. I believed it would go through, and I acq uie seed in that against my own ninvictions of wh;it. wii.i my interest. I did iint l»li«« it was my interest to make the consolidation, and 1 yielded to t^ewiob**' of my associates, as I generally do where I have respect and confidwce in them. Q. At the time this conelnsion had been reached yoa therefore ko^* that the stock of the Kansas Pacific and of the Denver Pacific nai^ the scheme would be exchanged for stock of the Uoion Pacific Bft'i^' wayt — A. Tes, sir. Q. And when instructions were given by yon, or by you and Mr. G©oJ*' as trastees, to defend this suit, you knewthat that Denver Paciflo rtoc* that you were going to part with would, under the scheme, be ei«lwa0^ for Fniou Pacific stock T — A. That was supposed to be embraced ia *^ agreement. ^^ Q. When you parted with that security you knev tbat that seca^^ would be exchanged for something that was worth $2,986,000; is **• not correct I — A. I do not remember. ' Q. The amoQut of the stock was 29,986 shares T — A. Yes, sir. Q. You knew it was worth par if exchanged for Union Paciflcf ' No; Union Pacific was not worth par then. Q. What was Union Pacific worth f — A, About 86. Q. In Jannary, 1880, a week before; from January 15 to Jan**' 24 1 — A. I think so; along there. Q. Is that yonr best recollection of its price t — A. Somewhere am** in the eighties. Oommissalonei Andebbon. I am talking of jost that week. UUSSELL 8AQE. 359 m robe WiTiTESS. I do not recollect; I have not looked at it. pgjjyjfiB PACIFIC JiTOCK WORTH WHATEVER THE UNION PACIFIC WAS. Q. You knew that the Denver Paci&c stock under the scheme was worth whatever Union Pacific stock was worth, and was to be exchanged for itf—^* ^ supposed it to be. Q, At that time you were a director in the Union Pacific, were you not!— A. Yes, sir. Q. You became a director in 1878? — A. Eighteen hundred and sev- enty-eight j yes, sir. Q, What committees did you serve on f — ^A. I served on the executive oommittee a part of the time, and I think one year on the finance com- mittee. Q. Did yon hold any ofiice in the Kansiis Pacific except as trustee of the consolidated mortgage t — A. No, sir, I believe not. Q. You were not a director there ? — A. 1 do not remember now^ I do not know but I was elected a director ; I rather think I was. Q. When were you elected a director of the Kansas Pacific f — A. I cannot 'say. Q. Were you such director at the time of the consolidation f — ^A. I do not remember that. Q. Do you remember being present at the meeting of January 24 1 — A. Tes, sir. Q. Do you remember taking part in the discussion 1 — A. I think it very Ukely. Q. At that time how much stock of the Kansas Pacific did you hold f — A I cannot answer. Q. You cannot answer that f — A. No. Q. Yon did hold quite an amount of it ?— A. Yes, sir. Q. Do you remember that after this consolidation there was a ratifi- cation made by the stockholders of the Kansas Pacific, which you signed !— A. Yes, sir. Q. Please look at the paper I show you and state whether you owned the shares for which you signed. — A. Yes, sir ; I have no doubt of that. I dionld never have signed it if I had not owned them. Commissioner Anderson. Give the amount. The Witness. Nine thousand nine hundred and seventy-seven. Q. When was that paper signed f — A. There does not seem to be any date. Commissioner Anderson. I suppose from time to time, and not all signed at once f The Witness. No ; I suppose not. Q. Do you know when you signed it yourself! — A. I do not. Q. You do not remember how long after the consolidation it was! — A. Uo, sir. Q. Do you remember whether you owned the same stock of the Kansas Pacific at the time of the consolidation which you did when you signed that paper t — A. I have no doubt I owned the greater portion of it. I do not remember the particulars. LABOE HOLDER OF KANSAS PACIFIC AND UNION PACIFIC STOCK. • Q. The Kansas Pacific stock, as such, was not dealt in after the ' Bolidation, was it, or very little f — A. Oh, yes, sir : it was dealt fc was a large holder at that time in both the stocks, both Kansa* '' and Union Pacific, and dealing in them. 360 U. 6. PACIEIC KAILWAT I'nj.m Q. Was not the coiiTersion very rapidly mad6| as boob as the leeni- ties were ready, so that afterwards it was merely known as TTnioa Bih ciflc stock t— A. Ob. no; it was no mote rapid uian otdlnaiy tnume* tions of that kind. Some people wonld rnsh m to make their ezohtagtt and others woald wait olong^ and I presnme are waiting now, tat all that I know. That is the history of the most of those things. Q. At the time of this meeting how mnch Union PadBcdid yoa hddl- A. I conld not answer that without an examination. Q. Do you know whether yonr controlling interest was ITnioii PM|e or Kansas Pacific t— A. I had a- pretty large interest in both oompantai^ of the stock. I have been a large holder of other secnritieB all the wif throoffh. Q. 0:d you also sign for yonr Union Pacific stock the ratifloatiimthrt t was sigued by the stockholders t — ^A. If yon have it there that will tell the story. Q. Please look at the amount of shares yon have tliere on the seeoad page; 15,000 shares, is it notf — A. Yes. shr. Thi^t is quite likelr. Q. Do yon also think that you ownedf that amount of Uuioit FM&ft stock at the time of the consolidation t — A. I did. 1 8ouie:imci.uviicA as high as 30,000 or 40,000 shares. Commissioner Anderson. I mean at the time of the con!«oii«UMlQB> The Witness. It is whatever it was at the time I Mg;.iHi. I do iv^ borrow things to sign on. Q. Do you recollect the course of the market as to the Ktiusus PjtriB^ stock during the year 18791 — A. It was very finer natiiii;. Commissioner Andkbson. I mean its general cuur^ , sturtiugiu/^*^ nary, 1879, and landing in January, 1880 f The Witness. It was Commissioner Anderson. Quito a rocket t The Witness. Yes, sir ; and that was what caused such a desire the part of the Union Pacific directors and stockholders to bring this consolidation. There was an apprehension that it would be verted in another direction, and would be very injurious to the Da Pacific. KANSAS PACIFIC ABOVE PAR IN 1880. Q. As a matter of fact, did the Kansas Pacific stock liot rise fi about 10 in January, 1879, to about par in January, 18^0 f — Yes, sir went above par. It was 10 per cent, at the time of the consolidat with the Union Pacific. Q. In the statement which you have handed us to-day, I underst^** that all your transactions relating to Kansas Pacific stock and boi are entered ?— A. This is what I bought and sold there. That is abstract that the young man took from my entries there. Q. Does it contain all the transactions which you entered intot No ; I told him to make some others which you asked me for, bonds and other things. Q. My question is, whether this contains all the transactions in sas bonds and stock f — A. It does, from that day. Q. From July, 1878, down to the date of the cousolidation fr— A. sir. I have got some collateral interest in the Saint Joseph securit and Saint Joseph and Western, Commissioner Anderson. You answer more than i^y question for. You will kill the stenographer before he gets through. I no number of purchases of Kansas Pacific stock which are marked having been bought from Mr. Jay Oould during the year. The Witness. Y'es, sir. Ni iQ d Tie ^. to a as HUSSELL SAGE. 361 INTEREST IN SAINT LOUIS POOL. Q. In thoae case^ the price of the purchase is not gix-en. I call your Qilitention to the purchases of the 7,105 shares, with some other securi- ties, on the 18th of March, 1879. Can you tell me the rate per share! — ^ Ko; I cannot tell you. As I say, that was a part of the Saint Louis pool Aat I told yon about this morning. Q. That was whatt — A. I took two twelfths, as it were, when he pur- chased out the Saint Louis pool, as it was called. There had been a pool formed in Saint Louis, running three or four years, by i)eople there jttokiog ap these securities, Mr. Greeley and others, and Mr. Meirer, I think. And Mr. Gould bought that interest. I took this interest in, and wben I took that interest I expected to use that in connection with the llissouri Pacific system. Commissioner Anderson. I am only asking about that item. The Witness. I have only regretted down to this time that it was not done so. Q. Ton took two-twelfths at that time I — A. I took, first, one- twelfth, and then afterwards a second twelfth, and tried to get others to do the same— Commodore Garrison and others. Q. Does the item which I now indicate to you represent one-twelfth or two-twelfths t — A. Two-twelfths. Q. Did you pay to Mr Gould the same price that was fixed as be- tween him and the Saint Louis parties f — A. I so understood it. Q. And you cannot tell us how the rate is to be arrived at by disen- gaging these other two items? — A. No. That is made up, and I sup- pose I got it at just what it cost him. Q. Were those securities delivered to you, or did you simply take an interest in the poolf — A. Xo, sir; the securities were delivered to me. Q. The securities were delivered over ? — A. Yes, sir. Mr. John F. Dillon. I would like to have you examine, between now and to morrow, so that you can answer it, the relative value of the Union Pacific and Kansas Pacific stocks within a week of the consoli- dation, and also your personal holdings in the two companies, stock and other securities. The Witness. I can do that. The Chaibman. We will hear vou again tomorrow at 11 o'clock. KUSSELL SAGE. The Commission then adjourned to Friday, May 13, 1887, at 10 a. m. No. 10 Wall Street, New York, Friday, May 13, 1887. The Commission met pursuant to adjournment, all the Commissioners being present RUSSEL SAGE, being further exam^ne».ietween yourself and Mr. Gonldl The Witness. What negotiation t Commissioner Andeiihon. The negotiatlnu by whiub you paid ( that eheck for these securities. — A. As I stated yesterday, I bon| this two-twelfths interest as I understood. Uo paid $1,200,000 for aud I took $200,000 interest in ft. Tliis is the accrned interest fe the time be paid for it. Q. Whnt was the aecrued interest ! — A. $li60. Commissioner ANDfiBsON. Then, us I midersland it, the Saint Lo party got $1,200,000, and for that they surrendered their Interestai this pool, and those iutexests amounted to Just sis times the fignrea t] ar(^ stated in this account, which represent^ what you got. The Witness. That is my rccollwition ofit. . Q. Then the whole interestof the Saint Louiw party- in the pool be six times 20 Denver Extension bonds, six times 7,185 shares of Kl sun Pacific stock, and $1,200,01(0 in certilloatea?— A. Ye-s sir. Q. And for that Mr. Could |iahl tliem, or agreed to pav them, I 20O.OOOT— A That is my reooilection of it. Q. Can you explain why there was a distinction between the . of the Ivansas Pacific stock aad the certificates in the pool agraen as originally miideT Tlie certificates carried an inten's't iu thoKaa Pacific stock whicli was already in the pool. Do you know whetJ this represeuted stock that had been added to the pool after tliec Scutes were madet — A. I 'o, d«^ 1 cannot tell you anything diflerent from what is on that paper. Q. All yon aro able to nay is that yon bought with $10U,000 these J bonds and $100,000 of reorganization bonds, and also paid for3,&aa| shares of stock f — A. That is as it appears there; I presume tlmt raj the proportion; 1 understand it. That is the proportion of the interefli which 1 took in the purchase. j Commissioner Andebson. What I cannot understand is that the xw organization bonds are quoted at that time as being worth about p^H 80 that the reorganization bonds alone would consume the whole of tJ $100,000, and the 3,502 shares of stock would appear to have biwu s aobiloly thrown in. Look for yonraelf. The Witness. I do not know abont that; Mr, Gould was absent, iu> donotknow what the change in the values was, Ilooklbointerestiu t1 purchase at cost^ whatever it was. 1 do not remember what tbat nrs Q. Then Mr. Gould may have made this purchase some time befor — A. That waa it ; it was not closed up there ; I entered it when ^ paid for it, and that accounts for that interest lieicg added to it oo It return home. I think he was gone about four weeks, if 1 recollect rigrbl Commissioner Akdehson. Theinlereat represents at fi per cent, for* little over half a year, 830:1 on $100,000 1 The WiTNEs-s. I guess it was 7 per cent, then ; I do not remember; Commissioner ANDEltaoN. No; the interest only represents a sliinic period. The Witness. Well, he was not gone so long ; that is just wli»t it represents, just the proportion of the interest in the purchai * - ' which I took. Oommiaaioner AjrogBaoH. The information daived by yon h BftggH RUSSELL SAGE. 365 old i8| that he himself purchased at similar rates his proportiooate rt of these same secarities f Che Witness. He purchased the whole of them, and sold my share them to me. ). He sold them to you at the same rates at which he had bought Bmf— A. Yes, sir; adding interest. Q. I notice that there is no purchase of stock on this paper prior to irch, 1879. It was about March, 1879, then, that you began buying is stock? — ^A. I think so. }. Are you able to tell us today exactly what securities of the Kansas jsiACj and what bonds you held at the time of the consolidation t — ^A. ated here yesterday, I think. I can give it to you, I guess. ommissioner Andebson. Yon said you would look it up. be Witness. I held on the Ist of January Kansas Pacific ommissioner Littleb. January, 18T9 ? lie Witness. January, 1880. I held 8,877 shares, and 14,700 shares Tiiion Pacific. By Commissioner Anderson : ;. Do you know what bonds of the Kansas Pacific you had at this e t— A. I have not got that tabulated here. I held quite an amount [bose bonds. ^. What was the character of the bonds that you held ; do you re- jmber which they were without giving the details of their amounts f — , I held Kansas Pacific consolidated bonds. 1 have got a memo- Ddam here of the Saint Joseph and Pacific bonds. Kansas and Ne- Mka is another. Q. The Kansas Pacific consolidated bonds are known as K. P. con- Isf— A. Yes, sir; that is it; and I had Denver and Pacific bonds. ^ Have you enumerated all the kinds of securities ! Phe Witness. You want the amount I commissioner Anderson. Afterwards ; but I want to know now if I have given us a statement of all the kinds of securities. DENVER AND BOULDER VALLEY BONDS. .. All, except I think there is Boulder Valley; I bad some of those iver and Boulder Valley bonds. ommissioner Andebson. I want you to get through with the enu- "atioD. he Witness. That is all. \. How many of the Kansas Pacific consolidated bonds did you hold t L. 1 had $758,000 of bonds. \. How many of the Saint Joseph and Pacific f — A. One hundred I eighty-one thousand dollars. I, How many of the Kansas and Nebraska bonds f — A . One hundred 1 fifteen thousand nine hundred dollars. J. How many of the Denver and Boulder Valley ? — A. Ninety-four )aBand dollars. That finishes the lot Q. Have you stated all the different securities of these two roads and eir branches — ^the Union Pacific and the Kansas Pacific — both as to ares and bonds, which you held at the time you voted for the consoli- ition!— A. I have not examined, only as to the stock in the Union aciflc I think I owned some stock in some of the roads tli^»^ *""* ^ a not sure as to the date. I have not made that examinati ■•c -• 8S6 u. 8. p^cmo BAiikWAT cauoBaloM. Q. Some stoek in the biraiMii lioee, do jos meeitt— A. I fiifekM)! can give yoa tliat. Q. VnUyoapleaaeprepttrelbrii8a8tet6meiit|MtliaiiireeaoiMj«^ what yoar interests were at the time of the vote fat the oeasolMiflBii in all the varioos stocks and bonds that might be aflhetei by ttt*^ YeS|8ir, SACTF J08BPH XVD VTEBTWSB* Q. In regard to this Saint Joseph and PaoUe and ITtmaas andBs- braska do yon remember whether that was bought dlreetlyby jouMif or in connection with anyone elsel-— A. Ibonght a great many of tiiM bonds in the open market here; I see by my books that I tmdsl; ii them : I bought and sold. Q. Have yon prepared fbr ns a statement of yonr porohnses. in Mit Joseph and Western t— A. No; I have not; I hfsvB got mir^wggib^ gate here. Gommisdoner Ain>EB80N« We called tor it yesterday, and wooMHdi to have that account. If it will cause you too much tnmMe wsiril send some one to copy it from your book if you will give the HuBithi The Witmsss. It is notneeessaiy ; I will have a copy of it madSi Oommissioner Anderson. The account in the Saint Joseph aadlM^ em we desire. The WiTNKBS. Yes, sir. Q. You say you bought these Saint Joseph and Weafeani seaorittaiii the market here t— A. I bought those Saint Josq^h and Westvasri Kansas and Ifebraska. I bought and sold; Q. Oan yon tell nsatwhat rate you bought tiie Knnsaa aid Birtwi' kaf — A. No; I could not without examining the list^ Q. That is why I want the statement for them. Do you know how long you had held them before the consolidation t — ^A. The entries in mj books will show. Q. Were any of those bonds used in the consolidation for the exchange of any securities of the consolidated company t — A. I think very likelS they were. Q. By yourself! — A. I think so. KANSAS AND ITEBBASKA. Q. How could the Kansas and Nebraska be used for any of the ties of the Consolidated Company t — A. I do not remember now the cumstances, without examining the entries in the books, of the tions. Q. In order to make such use of them, did you not have to make soic^ agreement with the oflScers of the company by which they would td^* them in pay for bonds or for stock t — ^A. Yes, sir ; I suppose so, or el^^ they would not be taken 5 they went in as others went in, I presume. ^ Q. Your impression is that some of those bonds were disposed of i^ that way ! — A. I do not recollect the particulars connected with it Q. Do you know that at the same time Mr. Gould was a large hold< of these same securities, Kansas and Nebraska and Saint Joseph ao Pacific?-- A. I think he was a holder of most of these securities. Q. Can you give us a statement or estimate, from your knowledge Mr. Gould's affairs, at this time, as far as it went, of what securitiei (^ the Elansas Pacific Mr Gould held at or about the Zitk of Janqtf^ 1880 1— A. Not the slightest. RUSSELL SAGE. 367 Q. Do you kDOW how many shares ho voted on ? — A. No, sir; I do not know that I presume I may have seen it at the time, but I never ^rg^A my mind with it. It is a matter of record. Q. He was the first signer of the ratification, and signed for, I think, 79,000 shares. Do yon remember noticing that fact when you signed the same paper yourself? — A. I do not rememl>er it now. I presume his name was on before I signed, but I do not remember now. AS TO GOULD'S KANSAS AND NEBRASKA HOLDINa. Q. Do you remember whether he held other shares of the Kansas Paciflo besides that 70,000 shares at the time of the consolidation ? — A. I presume he was a large holder of both the Kansas Pacific and Union Pacific. Commissioner Anderson. I am now talking simply of the Kansas Pacific The Witness. I do not remember any details about it. He was a large holder of these securities. That was the general belief. Q. Do yon know how many Kansas Pacific consolidated bonds he held at the timef — A. I do not. Q. You know he was a holder of the Saint Joseph and PaciQc bonds tnd of the Kansas and Nebraska bonds ? — A. That is my recollection aboat it. I am not positive as to that. Q. Do you know how he obtained those bonds or when he obtained them t— A. I snpi>ose he obtained them as other people obtained them, by purchase. Q. My question is, do you know from whom ho bough tt hemt — A. 1 do not know. Q. Do you know what price he paid for them t — A. No, sir. Q. Did you ever hear him say t — A. No, sir. Q. Ton never have heard him say what price he paid for them I — A. ITot that I remember. I have heard him speak about his buying secur- ities, and paying, as gentlemen do every day, but I did* not charge my mind with it. It is a very easy matter to get at by getting him on the stand here. Commissioner Anderson. TVe have got you. "Sufficient for the day" Commissioner Littler. " Is the evil thereof." The Witness. I assume ho is just about like myself. He attends to his own business, and I try to take care of m^- own; and I am more soccessful in that than I am in taking care of other people-s business. Commissioner Anderson. I wish I was as successful in taking care of my business as you aret — A. Certainly; I am aware of that. CONCERNING THE KANSAS PACIPIO CONSOLIDATION. Q. We will come down to the consolidation now. Do you remember tiie occasion of the consolidation 1 You were present at the meeting, I think*— A. Yes, sir. Q. Do you remember whether Mr. Gould was there? — A. I think he was present. Q. Do you remember whether he took any part in the debate ! — A. I do not think he was a member of the board at that time. Q. He had been a director, had he not? — A. Yes, sir. 0* What makes you think he was not a director on the 24th t — A% ^7 recollection was that ho rerigned from botb. \)oat^. S68 U. S PACIFIC BAUiWAY Q. Do yon recollect wbeUiw tbat resiguatiou was a Hurprise to job when it was read on the 210) f — A. t siijipose lie bad a good Teaaeofbt it to himaelf. ' Q. I aak you whether it was a surprise to you. Had ;oa heard Won that that resignation was written out and wm to be presented f-A, ITo, sir: I do not remeniber that I btid. Q. Plettse recall the matter, and Bee whether yoa did not koov lie- fore you went to that meeting that Mr. Ooold's resignation was tvkt readt — A. I did not Q. Did yoa ask him why he reaigtied t^ A. Xo, sir. Q. ' Did yoa koov why he resigned at that time t — A. I hkn no tamt edm of faiB motives. He is a lav auto himself, an it were. Q. Did yoa gaess why he resigned at that time T— A. I am notlitti liabit of guessing in tbat Wiv aboat people's motives. I take QieirMll AS TO OOUIJ)^ BESIOKATIOK. Q. Do yoa not know that Mr. Gould resigned becaose the tiuM- tions that he was having, or that were going through, might beop* to criticism if he were a director in the road at the time they venoM- ' sammated ) — ^A. I have no reason to suppose auytbing of the kuid, or extent, b^ond otbws. Other people iit-tt uul doiog it. He had bison reasons, and those reasons vere known to hiai^t^ Q. Yoa BE^ other teople were in the habit of doing it Wffl ^ please s^ what yoa mean by "it"!— A. Acting upon their ow« ub- presBions as to what was proper for them to do and what wh v* proper. Q. My question to yon was, what was his motive for his resignattai ■ A. I do not know the motive. Gommiseioncr AmiEBSOlT. I am asking yon. The Witness. I have answered it. Q. Do you not believe now tbat the motive for his resignation '^. that as he was 'taking stock in the new company and paying for it «^* certain secnritieij of bis own, like these Saint Joseph and Western* had been advised that that would not do if be was a director in the c<^ pany; do you not know tfaatt — A. 24oj I do not know it Q. Do you not believe it today t— A. I have no belief about it Q. Can you assign any other xtossiblo reason for iti — A, Tbat v<^'* be a reason, I sujipose, with a good many people. MB. GOULD A DtEECTOB AOAIN. Q. Did he become a director again aftcrwardsT — A. Yes, sir. Q. How soon afterwards! — A. I do not remember the date. Q, Did he become a director during the same year, afterwards f— — I do not remember tbe date, as I stated before. Commissioiier Andeuson. Ue resigned January, 1880 1 The Witness. What was the date of bis resignation j I had forgotten" Mr. John J. Dillon. He was named in the articles of eonsolidatic:^ I think. Commissioner Akdersodi. That will explain it. Please look at t'^ articles of consolidation and see if Mr. Jay Gould is not named as o^ of tbe directors. The Witness. Yes, sir; it is iu this printed form. Q, Those articles went into efiect how soon after yon had present^ f^ald'a resignation asadVtectoi^ — A. \&o'&Q\.t«m«aft3Hcv^0 Q^ "S'ou were present at this meetiug? — A. Yos, «>ir. Q. t><> you not know those articlos of cHMusoliihition won* signed at the loeetiD^ on that same dayt — A. I presume thoy were. Q, go that you presented his i-esiguation at the mooting, when you oouveo^i A°^ ^^ became a director again as soon as the ariirU's wero sigDedy that same afternoon: that is the fact, is it notf — A. 1 do iiot> remem i>cr. Q. please answer us. You know that those articles were signed in vonr presence at that meeting, do you not!— A. 1 do not remember tliat I presented his resignation. THE KANSAS TACIFIC CONSOLIDATION. Q. I read from the minutes of the meeting: The president of the company (Mr. Dillun) laid boforu tlio meeting; tlio roHignatioii of Mr. JTfty Gonld as a director of this company and lUf.'Uibcr of itH oxocntivo com- mittee, dated January 10, IdSO, and stated that ho had acci^pted the name. Od motion of Mr. ISage it was voted that the Haid reHi;;iiation ho received and iie- eepted, and that the action of tho pre^iilent in accepting the Hunie he and the Manic iH hereby approved. Doyoa remember that circumstance? — A. 1 did not rcnuMnber it until you r^ad it now. I presume that is correct. Q. I :isk ynii ii it lu» not true thiir Mr. (HouUl, oi! that same afternoon, InnMni^*. iiiidtr ilic ;rrticles-of consolidation, a director, as soon as they vo;vi*'!;:5'(il iifid in > our presence ? — A. If the minutes say so; I do not ifuienilHT tl.f tniiiNaction. I should say that he did, and I ]>resunie Ibiit thi'v siiiif tliiit; I did not charge my mind witli it. Q. Tlii^ niiiin:es state that — At I p. III. a rrcess was taken after tho articU's had ht'eii read iiiitil :{.:{0 p. m. ResssdJili.cti at :^'*U p. m. Onuio.ion of Mr. Dexter, it was voted that whereas this company has nnit.«d and eoDflolidatod vri h the Kansas Pacific Kailway Company ami the Donver Parilie Rail- way and Telegraph Courpany into the Union Pacitic Railway (;om]>any, iJiat iJio vtock-books of this company be closed. When you reassembled that afternoon you uiiderstood tliat the articles of consolidation had been actually signed; is not tliat so? — A. If it states so there, I did; I do not remember. Q. Do you not remember that those articles were signed? — A. Yes, sir; I remember that. Q. Outhat day when you had all these meetings? — A. I ]>tesume they were. Q. Ihave read, and you say now timt I recall the fact to you tli;it jou remember it, that you moved that this resignation of Mr. (lould should be accepted; does that recall anything more to you about it?— A. It recalls the fact that the resignation was ])re.sented and ajiproved by the board — the action of the president in accejiting it on the lOtli, » stated there. Q. Does it not, perhaps, recall the fact that Mr. Ooiild hae reapfiointeil witbin 24 p B $10 u. & PACiFiq BAiLWAT oo>a[iaia(»r. '' '- artidea of consolidation t— A. Becaose I mpytmoA that It traa fMM that bo wanted bis resignation aooepted, and the boaid aefced iqwaib reonest, the same as yon woold if you were there. . Q. That is what I sopposed also, and I ask yoii whether yoa wM upon his reqnestt-^A. I say 1 do not know. Yon asked me Ariha reason, and I say that was the reason, I suppose. Ton asked theqiNik tion, and I will answer it. Q. I accept that answer. Is it not perfeofly clear that Mr. GkNiId.lir some reasons of his own, wanted that resignation aoted uptm^ m is- quested you to move its acceptance t— A. I do not remember wiielkr be asked me to do it ; bat, whether he did or not, if a resignation cum before a board where I am a member, and no one else did it, I dmild move that it be accepted, or that it be laid over. OOITLD A DIBEOTOB FOB XAUT TBAB8. ' / Q. And Mr. Oonld remained a director in that road for how hug af- terwards ; quite a number of years t — ^A. Yes^^sir. Q. An active, hard-working member t— A. Yes, sir. Q. Taking great interest in the afEnirs of the company t— A. YeSyrir. Q. So that you did not consider that his resignation on the HA sf January was a serious one, and meant that he wanted to abaadoD the j business, and not be a director of the road Auy more t That wisMt the object, was it t— -A. I should judge not, firom the faot of his aeoapi* ing a reappointment. ^ . ' Commissioner Akbbbson. We judge not, too. Q. Do you know Mr. Solon Humphreys t— A. YesL sir. Q. How long have you known him t — A. Twenty-five years. Q. What is his business f — A. He is a merchant- Q. Is he a large dealer in stocks also, and a holder of these difforent • securities t — A. He has been a holder of railroad securities for maoy years, in the firm that be was connected with, E. D. Morgan & Co. Q. Wbat positions has he held as trustee of mortgages, or receiver-t do you know!— A. Ue has held several positions with railway cone*-* panics — be was connected with the North Missouri Kailroad for aIoc^« while, and the firm of E. D. Morgan & Co. was, very largely. Q. Was he not connected with the Texas Pacific mortgages also!— -£? I think quite likely, and other roads. Q. Washenotoneof the receivers of the Wabash! — A. Yes, sir, was president of the Wabash Company. Q. Has he not been identified, very closely, with the railroads tlii are known as Mr. Gould's property for many years !— A. No, I do think he has, beyond the amalgamation of the Wabash system. Ht interests, as 1 understand, were principally in the North Missonri roa Q. The Missouri Pacific also!— A. Not largely, in that. Q. Do you know whether he has much acquaintan(« with Mr. Goul — A. Yes, sir; I think he has been acquainted with him. Q. And had at this time, in 1879 and 1880!— A. Yes, sir; he acquainted with J\Ir. Gould, 1 guess, longer than that. Q. At this time he was well acquainted with Mr. Gould, and sawbr frequently in relation to business matters! — A. Yes, sir; I presume"' did. THE DODGE AND HXraPHREY BEPOBX. Q. Did you have much acqnaintance with Mr. G. M. Dodge in 1879^ A. Yes, sir; I knew Mr. Dodge before 1879. BU8SELL SAGE. 371 ^ He was tlie original engineer in the constraction of this road, was j0 not t — ^A. The Union Pacific road. Q. Do you recollect writing a letter to these gentlemen on the 23d of -^toher^ 1879 1 — A. Yes, sir. Q. You remember that t — ^A. I do. d* What was that letter aboatf — A. It was in relation to the desira- l)I^xiess and the valae of the property out there, &c. Q* Is that all you remember about it? — A. l^o; we asked them to n^^ US their views in relation to property out there. Mr. Dodge was 12^ eminent engineer and railroad builder, a citizen who had represented )r^^ of the Iowa districts in Congress, and Mr. Humphreys was an loi^ored and well-known merchant for more than twenty years. ^3* 1 ^^ only inquiring as to what you put in that letter; what you rf^-ote to these gentlemen f — ^A. The letter will speak for itself. I do ^^ remember the language of it, but we asked their opinions as to cer- i^f.s3 things which are stated in the letter, and they gave them. We IfcO^g^t they were very proper men to give the information. ^iJommissioner Anderson. I know they are proper men, and I am j^T. j^ trying to see what you remember as to what you put in this letter. f;phQ Witness. If you want to get the information, I am quite happy to &^^ yott any we possess why we selected those men, and if we erred ^ judgment I am willing to tell you about it. Q. No; you have told me that you asked them to report as to the desi^^l^Q^^ of the roads, and as to the value of the property. Is that akl jou remember f — A. The desirableness for the consolidation of the property. Q. Yon asked them to report as to whether a consolidation between the Umon Pacific and the Kansas Paeific would be desirable, did you? — A. rhe letter will speak for itself. Q. Do you remember who signed that letter ? — A. I do not recollect A'ltbe names. Q. TDell us what yon recollect. — A. I signed it myself, and I stand by '^iafc I signed. ' Q. INolKKly fs finding any fault with the letter. We want to find out i^ho ^was interested in these movements then. Who signed it besides llr. Ij&ussell Sage ? — A. The gentlemen I stated in my examination yes Q. Xt will be very short to give the names. — A. I might err in giving he EES^mes. GoEEimissioner Anderson. Then we will correct you ; to err is human. TIb.^ Witness. I do not propose to state anything that I do not re- Diieiikl>er clearly; that would not be worth anything to yon. SiaNEBS OP THE LETTER TO DODGE. Q-. Do you not remember any person who signed that letter besides joorselft — A. I think, Mr. Dillon, and, perhaps, Mr. Ames; I do not leooUeot all; they were men who were largely interested in the prop- erty, and were very desirous of bringing about a union of the properties. Q. Was there not somebody else wJio was deeply interested and very dfirirons of bringing about the union of the properties — was there QOtjust one other man t — A. I do not know; Mr. Gould owned about |17,(K)0,000 of stock in the Union Pacific ; he was probably interested in that, but I think his real interest, his judgment, was more iu bar- noDj with mine, which was opposed to it. I was opposed to it myself, AS I said yesteroay. I'ACIFIC RAILWAV cnjn:,- Q. Da you not kuo^tliat Jay Gould signed thntlftterT — A. Ido^^ retiiember whether be sigued it or not. (JoiiimisHioner ANDKitson. Answer my tiiiestinn. 'file Witness. I do not recollect all tbe names. Q. Are you not as positive as you are tbat you are ftitlJng in L^ uiimr tliut Mr. Jay (ionid did unite in writing tbat letter to Snluri Ilv^ pliruya and Mr. Uudge! — A. 1 do not rooollect tbat be did. Q. It is quite na likely tba tbe did us that Unssell Sage eigneil iLf — _ Oh.yes, eir. OommismoDcr Andkbson. I will read the tetter, so that you ciia ^^ whether you recognize it ; it is on the minutea already. (The letter iwldressed to U. M. Dodge and Solon Humphreys i^, then read.) Q. Do you remember the letter, now that I read it to yont — A. Vo&' sir. Q, You see tbat the maiu thing tbsit yoti ask theeo gentlemen in to report upon a basis ot'coiisolidatiout— A. Yea, sir. Q, l>o you remember whether these Ke»t'»-'niP" made any aiisner ait all to this letter! — A. I think they made an answer to it. Q, Did yoii not see the luiswerT — A. Yes, sir; it was read to tlie iHHird. Q. Do you remember when the auswer was made 1 — A. I do not tecaJI the date. Tbe minntei^ of the company, of the board of director, r-ill show. Q. To whom was that answer of these gentlemen adtlreased t— A. It was addressed to Mr. Gould, Mr. Qordon, Mr. Dexter, Mr. Aiai-H, M r. Sage, Mr. Atkins, and Mr. Baker; they were all directors in the Union Paoiflo road. Q. Do you remember whether the answer was printed or writteut— A. i do not. Q, Being addressed to you, you doubtless received it, as well as tCXi other gentlemen; is that not sof — A. My recollection is that it wj presented to the board and reati at a board meeting. Q. What I want to know is wbetber this answer, which is ilati January 10, 1880, was received by the gentleman to whom it Is a.^ dressed on tbe day when tbe letter was dated; it is dated in S» ' York. — A. I am unable to state the day because 1 do not recollect ^ A8 TO DODUE'S BKPOKT. Q. Will you swear tbat yon did not know oil about this report for- week or ten days, or several days, before the meeting of January 2'! wiM heldl Please look at the report; you know what it is.— A. 1 kna^ what it is. Commissioner Andeuson. It is dated the ICth of January T The Witness. I do not remember seeing the letter until it wa« per sented in the board of directors. Q. You will not swear that you did not see it t — A. My befit recoils tion is tbat I did not see it. Q. Was it not talked of between you and the other gentlemen whom it was addressed before the board meetingt — A. No, sir; »ocr3 of those gentlemen 1 did not see until we met in tbe meeting. .iny pnf**-* ^aoS reeling iii-lil of ll *_*^-,ev^ niinnics (i|n»w we** ''■■\iiw'> crton, ]).:d;.e, Iliii* •* '.itcV- HM-nt i.t that uiitf'-* rented the resignation of Mr. Jay Gould as a dm cior of this L-ompao^^L^ tW ^ «-» - resignatiou I— A. Yes, sir. " ' - -«.«ti( dated the 10th day of January, 1880, and accepted by him as of th9^^.y tbi date." Do you remember the fact that the president produced tbj»*^ Q. This was the resignation dated the same date as the resignatioi'^ * in the Union Paciiic, was it nott — A. Yes, sir. j^ r Q. "On motion of Mr. Sage, seconded byMr, F. L. Ames, it was r^"* ^ji i solved that said resignation be accepted, and the president's actJon i»-^^jr 3fr this regard ratified." Do you remember that yon moved that, and Mi«^^^ m Ames secMinded it f — A. I presume so, if the record says bo : I haven*** doubt of it. RUSSELL SAGE. 377 Q. Now, that yea find that Mr. Goald resigned both of these positions tb^se two companies on the same date, and that yon presented both f tbese motions, does not that refresh your mind that there was a mo- ixe for this resignation, and that it was explained to yon why he re- igned t — ^A. It was not explained to me ; it came up there as a part of ,be business of the board. GOULD HAD NOT TOLD WITNESS OF HIS INTENDED BESIGNATION. Q. Are you positive, and will you swear that Mr. Gould had not told oa tbG day before that he intended to take this action, and wished you >mafe« this motion ? — ^A. Yes, sir; I have no recollection of his having olran to me about it. ^ ^^.re you prepared to swear that he never did, and no one did on bebalf Y — A. I. do not recollect his telling me } he may have told me, ; I doubt it. He is not in the habit of telling things until they are le. That is my experience with him. |, "ST ou do not recollect feeling any surprise at this resignation, either? ,. JH knew that he had a reason that was satisfactory to himself, and d Lb.^ did not send that in there as a mere pastime. It was business, tliBcrefore for the board to act upon, toocftinissioner Anderson. It was *^ business " ? 'h<3 "Witness. It was business that came before the board, and we ei lapon it accordingly. 3oxzimi88ioner Anderson. As they say, *Mt meant business''? [h^ Witness. It would be very strange indeed if aman of Mr. Gould's [eliig^ence and standing would send in a communication unless he ex- iCted his associates, one way or the other, to act upon It. Q, X know that ; but when we iind him restored to his position as [rector a few hours afterwards, and also that he was selling a large motiiit of peculiar securities to the company, it seems extraordinary liat yoa do not know that the motive was that he had been told that le could not, while a director, sell his own securities to the company. Ihat is a singular thing that you did not recognize that as being the controlling motive. After you made that motion, the resignation ap- pears as follows : GOULD'S resignation. New York, January 10/A, 1380. To Mr. SmNEY Dillon, Pretident of the Kansas Pacific Railway Company : I hereby resign my place as a director of your compauy and as n uioDibcr of the execative conunittee. • Do you remember that letter ? — A. Yes, sir. Q. You held it in your hand, I presume, at the time you made this motion, did you not f — A. No, sir 5 that does not necessarily follow. 1 presume the president presented it, and the secretary read it, and the motion was made, as is the customary thing in all boards of directors of corporations. Q. Had you noticed any difference in anything that Mr. Gould had done in regard to this company for a week before these meetings were held! Do you recall any change ? — A. I do not know of any. Q. Everything went on just as before ? — A, I do not recall any special change. Q. As far as directions to bring this suit, and consultatioDBinrei to the preparation of these articles of consoUdalioii) ^.Tid ^N«cfV 8. rACIFIC UAIUVAY COMMISfllffl ', youcaonot ruciill Hiiy (.'liiiuge in Mr. GouUt'K t raiisiiot ions that ^ !de .«» ^nn nti Central Railroad stock, 2,521 shares. i i-J.wo uu Joseph and Denver City receiver's certificates 59,000 00 Saint Joseph Bridee Building Company bonds.. . 784,000 00 ISaint Joseph Bridge Building Company ' stock, \ 784,000 00 4»000 shares > Saint Joseph and Western stock, 15, 162 shares at 2u 307, 24000 "Hastings and Grand Island bonds 375,000 00 { ^. n^. _ BaU County bonds 75.000 00 ] w,-5U4 4o Total (34,641 shares) 3,464,168 48 X ^stU yoar attention to the fact, in connection with the Saint Joseph 3^dge Bailding Company's bonds, $784,000, and 4,000 shares, that in jitr. Dillon's report is this sentence : "Also $784,000 Saint Joseph Bridge llfst-mortgage bonds, and 4,000 shares of the stock of said bridge itbiown in)," and in the report I have just read you will find the 4,000 ghares included, with nothing charged for them. I now ask you, are yoanot entirely satisfied that the securities reported by Mr. Dillon at the meeting of the Kansas Pacific, at which you were present, and which had been agreed to be paid for, either in full paid stock or in consoli- dated bonds, are the same securities, or are included in the securities, which I have read to you and which Mr. Mink reports were received from Mr. Jay Gould in payment of the stock of the Union Paeitic Rail- way t^A. I assume, from what you have been reading there, that the arraDgenient was made with Mr. Gould. I will add, after a few moments leflectioD, I have no doubt that he represented a large number of the holders of these securities. GOULD REPRESENTED A LARGE NUMBER OF HOLDERS. Q. Who represented a large number of holders ! — A. Mr. Gould, be- eaasethey were very widely distributed and largely dealt in, and had been, I may say, for years. It was not a new thing. These things were 80ld here as Reading is sold over in Philadelphia and the world over. Q. I dare say; but the only point I am making is, that at the meeting of January 24, 1880, it was reported in your presence that Mr. Jay Gould had sold about $3,000,000 or $4,000,000 of these securities to the com- pany, to be exchanged for stock of the new comi)any, at par, and that the report was made in your presence, and that you knew it I — A. 1 be- lieve that he represented a large number of other people. That is a Teiy oommon thing. U. S. PACIFIC UAILWAY COMMISSION. ^B^^^^H Q. Very possibly be did, or very possibly Ue did not. It is not loate- rial. " The presideut also reported ii like purchase on bebalf of this eoia- paiiy of 7,CHI sUares of stocjt iu tlie Central Itrandi Union Pacific lUrl road Company for $l,S26,5t>0,to bo paid for, oue-balf iu Kansas Piwific consolidated bonds at par, issued under the mortgage of May 1, 1879, aud tbe other half in [Juioii PaclfiG collateral trust bonds, at par." Thisia your mortgage that ia referred to as May 1, 1879, Were you present when that was read f — A. I presume 1 was, if my name is stated tkni as being present. CENTRAL BEANCH SALE. Q. What was that transaction in Central Brunch ? — A, The Oeutral Branch was a »ale of securities, and it was a very ralnable piece of prop' erty; was then, and is now. Q. Who made that sale to the company I — A. I do not remember rlift- tint,tly now tbe tiansaction, but I know there was a aale made there by Mr, Gnuld, or some one, I guess it was made by Mr. Gould. Q. Did you issue these bontis under your mortgage, id pajnieul for this stock! — A. I tbink we did. Tbnt is my recollection of it Q. What precise book that yon kept will show the issue ot ihew botiiU and tbe consideration you received in exchange for theniT — \. Our securities will show. Q. What precise book that yon kept will show tbe issue of these hnndis and the consideration you received iu exchange fir them t — A, IffM trying to get tbe thing clear iu my mind. The transactiou is not clear. Q. The question now is, what book we are to call for f — A. Mr. CM has kept the records of these transactions. Q. Mr. Calefis sick to-day. Can you bare tbe book brought iimand here which will show tbe issue of these bonds, and the eousiderntion received iu exchange for them ! — A. He is sick. CommisKioncr Anderson. Mr. Mink, yon know what book we want! Mr. JonN F. Dillon. Mr. Calef is tbeir secretary. I have neverwen his book. Of course, Mr. Sage is mistaken in supposing that the trna- tees, under the terms of that moi'tgdge, could iemuti auy bonds, and euUir into that trausactiou. The bonds could be issued only pursuant to Uk terms of that mortgage, and when the company got them they coold give them for this purpose, iftbey were assets in tbe treasury. GomuiisBioner Anderbok. Then the company's books will shofftlie consideration received 1 Mr. John F. Dillon. That is it. Tbe Witness. That you can get at. The company owned them. Mr- Mink can furnish all that. The Union Pacific books will show the vbo'^ transaction. Mr. John F. Dillon. Mr. Mink thinks they showthey wererecel^^ from Mr. Gould. Commissioner Anderson. Do yon know from whom the sale ^^^ madof Mr. Mink. Mr. Gonld. Mr. John F. Dillon. There is no trouble about the facts. -. Commissioner Anderson. But the trouble is we have not the bo**^ to show. AFTERNOON SESSION. BUSSELL SAGE, being further examined, testified as follows: By CommissioDer Anbebson : QoesttoD. This trade that I have referred to, and vhieb ^ BUSSELL SAGE. 383 k>y Mr. Dillon, of 7,616 shares of the Central Branch Union Pacific »tock for $1,826,500, which we have been told was Mr. Gould's stock, ^as negotiated, as to the terms, by whom, and which came to aboat ^239 a share t — Answer. I think the negotiation was made by Mr. Dillon. Q. You think it was between Mr. Dillon and Mr. Gould !— A. That |fi my recollection. Q. I am not talking now about the present condition of the Branch , makta over $500,000 against net earnings of S307,00O. The net cnriiingH fig — - 1881 wci-e $3L'8,;J46.23. and for 1882 $441,1'9S.38 ; in each year UietK^fi earnings iH'ing less than the rents of leased lines and tixi>d cliarge^^^^ Did you know tlioso facts during the years 1880, 1881, and. 1882 f-/r^ No, sir; I have not ha^l occasion to look at them since. y. After the president bad reported the sale of this stock at tbe pri^^ of $23'J, as derii-ed from the number of sbarefl, and the price named k^n Lim, this took place: I On motion of Mr. Russell Sage, iecbnded lij F. L. AiUHi, il wm I ilwoliwrf, That Ibe actioD or Ibe pratiidoDt in the porcliaiM of tho miiIi] Iwniit ^^i 1 Moclc, and dtuli oraafd pmchaaes be, nud oucb of then ia eevernily rsCiHM] and ^n. I proved, and iC is fiinlier ordered Ibal all tba said stock bo held and rai^ialernd luft£ I name of Siilney DiUoii. trustee, and tliat tbe said bonds bo deposited wilb tbe u«a«. I nror of tbis compuuy, wbicli rcaolution wiui iiunDiuiouslf carrleil. 1 Do you remember making that motiou t— A. I presume I made it, or else it would not be there. , AITBOVAL Of THE PURCOABES. ' ] Q, Then you approved of the purchase of the Union Urauch stock at I t23tf a share I — A. I approved the doings as recorded tliero, I haw ao I doubt. I Q. And you a])proved of paying Mr. Jay Gould for tbe Saint •losepfi I and Western securities at the price wbicb had been re)Kirted liy the I president t — A. I approved of all that this record shows. Ir sIiowk for \ itself. ' Q. Was anything further said in tbe board about these matters tbiu 1 you bare told us T — A. I do not remember anything. Irisahingtliueigo. | Q. AH that you remember is that the president made this reiHirl,aiid J you made tbis motion to conOrmitT — A. Ob, ithadbeeuconsiuereililKl I discussed, of course, before tbat was adopted. That wa« a mere pn I forma conclusion, after conmiltatiim and cousideratioQ of the wbole I matter. I Q. What consultation and consideration in reganlto tbe Union Ilroadi I [basin ess do you remember 1 — A, 1 remember it was di'50 ffhe Witness (interposing). Yes, sir ; property that sold at 16 cents n the last five years sold for $1.80. Q. As a trustee, would you not be guided by the earning capacity of ^\ie Toad and its financial history up to that date, before advocating such a purchase at the price of $230 a share ?— A. I should take that into account, certainly. x Q. Have you any reason to give for your vote in favor of this tranS; actiOD, any further than you have stated, which will show that it wa-* a prudent and proper thing to do as based upon the reports of its earn- ings at the time ? — A. Nothing except, as I say, the genenil discussion tbat took place there and its geographical commanding position in con- nection with the roads south and north, and east and west. It was a very valuable piece of property then, and I want to repeat it again, and I cannot repeat it too strongly, that it is to-day. Q. Did you know from whom Mr. Gould bought his shares of stock t —A. 1 did not. Q. Did you know how much that stock had cost him ? — A. I did not ; I took upon it as a very valuable piece of property. Commissioner Anderson. We have had that twenty times already. The Witness. It is not my fault. Q. Did you ask Mr. Gould what that stock had cost him !— I do not recollect that I did. never owned a share in central branch. • Q. Did you ever own any of that stock yourself f — A. I never owned ashareinit. Q. Did you ever know of its being sold in the market? — A. I cannot say that 1 did. It had been considered a very choice stock. Q. I have asked you only if you ever knew it to have been sold in the market! — A. I do not know; I never had any myself. (j. Have you ever heard of a sale of that stock in the market, or of aoy other shares of that stock than this stock ? — A. I cannot partica- lariie any particular sale of it. 25 PB U. S. PACIFIC UAILWAV COMMISSION. Q. Did yon ever hear of auy quotation of that Atock that npproxl- tualP*! $231) a ebaro t — A. I have heard it spoken of as boiDg the umC Tnltiiible stock that wait coiint'cted with the whole syBtem there. Commissioner Andeuson. That yon have said t^vo or three hnudreil limes. The Witness. No; I beg pardon, I have not said it ho often. Q. Have yon ever heard of any tmusaclion in rhat 8t dltlonul oR'i^r of anle by bin) of 2,(>S1 shoreg of llie Rtock of unid Ktmian Ccntrnl Codj _ pimj- fur the atini of t47!),iAI0. Do you remember that that matter was bronght upl — A. I do u»\ recollect anything, only as yon read from that now. Q. You were presunt at the meeting! — A. Yes, sir; I was. ll us uWul itl— A. I never passed over th road; I know very little about it. Q. Do yon know how many miles long it isT— A, 1 do not ; I canac Answer that question. Q. l)o yon know from what eity it runs ! — A. 1 have answered yo I hnve never parsed over It ami could not tell you, Coramisbiouer Anderson. 1 know you have answered that, but 1 a.i endeavoring to see if yon have any knowledge about the road at all. The Witness. I only know what is represented there, and what li contained in the reports, but I have not read them recently. Q. Do yon know in what condition that road was when you w^i present at this meeting f — A. Nothing only what is represented thev Q. Do you know how far it had been built or what it had coat f — J I do not re<»Ilect now. Q. Did you know anything about its ear:iiiigB at the time I — A. L «1 not rocollect. Q. After the rejmrt whieh I read to yon had been made, then thr& was done : On motion nf Mr. D. M. Erlgerlon, aecoudiil by Mr. F. OnrdoD Ooitirr, It wu, Sfolvcd, Thnt snld conditional offer lie tkiiproved, and tiie preRideul of this com- pan; bo dlrcctnd to execute an iuBtruDieut auoffl»|[ euob aceeptftoce. Do you recollect thatl — A. I do not recollect anything, only as yon read it there, Q. Do you recollect exclaiming or protesting against any acceptance OflhatoHort — A. Ko, sif; I do not. ~ Do you know anything about the subsequent history of itral and its present acco\u\l«\— x. "So,%w-, ■^ikts'^V read it I I Q. D. ^L of that < mk BUSSELL SAGE. 387 NOT A DIBEGTOB OF THE UNION PACIFIC. Q. Aro you still a director of tho Uuion Pacific I— A. No, sir. Q. Up to wbat day did you remain a director! — A. About three years ago, I think. Q. Did 3'ou interest yourself any in finding whether this Kansas Cen- tral ever earned the interest on its fixed cliarges ? — A. I have not in- vestigated that; 1 was not on the finance committee and did not inves- tigS'te it particularly. Oommissioner Andebson. Still you had been present on tlie occasion ^ben this security was acquired, and you might take some interest in jsc^itaining whether it paid its nxed charges or not. The Witness. Yes, sir; I knew generally. It was a new road, and w&^ acquired to prevent a competitor there in getting business and cut- C3* ^^^ y^^ know that that road had been foreclosed shortly before Q^\& meeting ? — A. I did not ; I do not recollect it. Large corporations arO compelled to acquire these branch roads to protect the main lines, ni^ny times, that do not prove to be very remunerative directly, but jiidirectly are a great saving to the treasury of the main system. Q. I dare say ; but when they are obliged to pay to their own directors \!^o or three times what the securities are worth to do that, it may not ^ a very desirable thing. Immediately after the transaction that I \^^ve rei)orted to you the president of the company, Mr. Dillon, read to tUe board a communication and report, dated January 10, 1880, from (>. M.Dodge and Solon Humphreys, in respect to the proposition to make a consolidation with the Kansas Pacific Ilailroao you remember how these meetings were held ? Which was held first f —A. I do not remember that. Q. T*tiesame men being largely in both companies, you had to move from one i-oom to the other, or at least you had to move to diflerent parts ot* the rooms to hold your separate meetings, did you not? — A. We could not have been in both rooms at the same time very well. Q. Old you bold the meetings in different rooms — the meeting of the Union Pacific and the meeting of tho Kansas Pacific? — A. My recollec- tion is that there were two rooms occupied by the two companies. Q. I call your attention to the fact that tho Union Pacific meeting aujuurried at 1 p. m., and reassembled at 3.30. Is it not your recollec- tion that the meeting of the Kansas Pacific was held after tho Union Pacific meeting was adjourned ? — A. I do not remember whether it was after or before. Q. The minutes show that the president laid before the tr conBideration the articles of union and consolidation. Is recollection that they were laid before the Kansas Paoifle 388 U. S. PACIFIC RAILWAY COHMI88IOH. had been laid before the Union I^aoific Oompanyt — ^A. I do not le member whether it was before or after. Q. The minutes show that the whole proceedings in the Union Paeilic were completed by 3.30 o'clock, at which time tiiey reassembled ud the articles had been signed. Is it not your memory, thcoreforei tint the whole proceedings of both these boards, indnding recess and sign- ing the articles of consolidation, mnst have taken plam between 13 ud half-past 3 o'clock f— A. It woald appear so by the reoovd, and I should be governed by the record rather than by my^ memory. Q. Yon recollect nothing that is diffiorent fh>m that, or that makes yon think it took longer t— A. No* sir ; nothing that I can think ot Q. The record then shows that it was STOCK-BOOKS OLOSBD. Meiolvedj That whereas this oompan^, the Kansas Pacifio, has agreed to Qaiteaiid consolidate with the Union Pacific Bailroad Company, and the Denver PMifio Bsil- road and Teleffraph Company, into the Union Paoifio Railway Company, that tin stock-books of this company lie closed. That was the same resolntion passed by the Union Pacific. Canyoa recall the resolntion t — A. No^ sir. Q. Yon do not remember that T — A. No, sir. Q. Then a resolution was passed to make suitable co nveyanees to carry the whole business into effect. After this had be en finished. I call your attention to the following resolatioUf jost at the end of toe meeting : ISSUE OF STOCK. On motion by Mr. Sage, seconded by Mr. £dgerton,-it was liesolvedf That the 6/^12 shares of the authorized capital stock of this company n- malDing unsubscribed and unissued may be issued, and the president andsecrctaiy are hereby authorized to execute certificates therefor iu payment for the first coap(m on the eon8oIic1at4>d bonds, and for other iudebtednsss of the company. Q. Do you remember moving that! — A* I do not, but I presume I did from tlie reading of the record. Q. What other iudebtedness was it that that stock was applicable to f — A. 1 do not remeaiber for the moment. Q. To whom did that stO(jk go? — A, I caunot tell you tbatj it vas doue a good while ago, and I do not remember. Q. How did you come to make that motion I— A. I do not remember; it was a part of the business of the meeting there, and I was a mere representative of the meeting in moving it ; that was all. Q. All the business had been done, and the consolidation had been effected, and the Kansas Pacific stock here referred to was provided for, and was entitled to exchange itself into the stock of the new com- l)any. What was the object, therefore, in providing that it might be issueil to pay other indebtedness of the Kansas Pacific! — A. Well, there might have been other claims that it was apprehended might arise that it would be necessary to make some provision for, and there migbt be a falling off in earnings so that they would not be able to iwiy tl^ interest; that is a very common thing in railroad corporations, to authorize the president to use the credit of the company to pro\idefor any contingency of that kind. Q. Is that all you can tell us about it? — A. I do not remember; I cannot recall it. Q. Do yon not know that that stock was issned to pay certain daimB that existed against that company tVien^aii^ tliat it was issned reif IIUSSELL SAGE. 389 ►rtly after that meeting t — A. I do Dot remember it ; I do not recall tbe -^nsaction. Cj. Do you know to wbom the stock went f — A. No, yir j I do not. Commissioner Andebson. Mr. Mink, you have not got tbat little ^f;ii,tement we called for as to tbe issue of tbat stock ? ^r. Mink. I have not. My recollection is tbat about two-thirds of jfj -went into the treasury of tbe company, and was disposed of in tbe ^I^ce of those securities. As to tbe other ones, I do not remember how j^ ^^as. It was all entered on the books of the company, and will ap- ^^3r in the account. -*■ Q. Do you know whether, at tbe time this resolution which I have ^i^^t read was passed, Mr. Gould was, in fact, on tbe books of tbe Kan- *^^^ Pacific Company a creditor of that company f — A. I do not. ^. Do you know whether he advanced any moneys that had been ^^^ to pay any arrears of interest on coupons ? — A. I do not remem- Yy^^ it now. ^. What branches of either the Kansas Pacific or tbe Union Pacific Y^^A'e you had an interest in from 1878 until tbe time when you ceased ^^ "be a director t — A. I think there is one extension tbat I have some g^ock in, and but one, of the Union Pacific road ; I have no interest in ^f%y other branches that I remember. OWNS STOCK IN THE TTAH KORTHEBN. Q, What road is that you refer to ? — A. 1 think it is the Utah Xorth- ern ; I can get my book and give it to you. Q. The Saint' Joseph and Western you have already told us you were interested in f — A. Yes, sir. Q. Have you that statement of your transactions with the Saint Joseph and Western! — A. No; I did not have time. I went out and got my lunch. I will give it to you hereafter. Q. The Saint Joseph and Denver, and Kansas and Nebraska, and Saint Joseph and Pacific, and Saint Joseph and Western, o you know whether you gave more than par for it? — A. I do not reoollect what I did pay. , Q. Oid you know anything about the circumstances of tbe transac- tion between Mr. Gould and Governor Evans? — A. I heard it talked over. Q. B J whom and between whom ?— A. I heard it talked over with Governor Evans himself; I went over tbe road with him. Q. Was Mr. Gould along?— A. Yes, sir, Q. I>id they reach any conclusion ? — A. 1 tbmk wot, \3d«cl. I U 8. PACIFIC UAILWAY COM Q. What was Goveruor Evans asking for the road t — A. I do aot^ iDfUibor tho price; it was a vt-ry high price; lio is a pretty high-prS^ mail. A pretty liigU road. Q. Do jou btill own your interest in this roadT — A, I own soiuco^ the bonds; yea, sir. Q. How many of the bonds do you own T — A. 1 think I own fifty of them. Q. $5I),000!— A. Yes, sir. tj. When did you luy them I — A, 1 cannot lell yon that williout reC* erence to the books. Q. Did jou hold them for a long »hilel — A. Yes, sir; Ihavponuet them for some time. Q. l-'rom whom did you buy them T — A. I cannot relate the cirviiuza stances ; 1 can turnish you an abstract from my book ; I can giw it t • the Commission. Q. Bo you remember wliat you paid for tlient t — A. I do nol n-aien : ber ; as I said before. I do not carry it in my mind. TUE POOL. Q. Do yon know, as a matter of fact, that this rond lias not etiruf^ its Used charges for some time past t.— A. It is reported so, bevaiue ttii^ have made a pool arrangement to divert its business in another dire n tion. I understand that is the reason why it has not earned it., Q. Are the bonds now in default t — A. Yes, sir. Q. For the last coupon only T — A. Yes, sir ; the last coupon. Q. But you have received your conpons regularly tver since jq (itvned the bonds until these last ones T — A. Yes, sir. Q. Are you aware that tho company paid s(}tni>thing like I.'iO for ikMi stock to Governor Evans, subject to $1,800,000 of bonds I— A. ldor». reuiember what was the price i>aid for it ; my recolluction is that it Wj not as high as tJiat; I think it was about par. Q. You think it was abont par!— A. Yes, sir. MB. nUNTINGTOS KXCU8ED TO On TO EUBoPE. Mr. ('. p. UvNTiNGTON, 'Will you excuse me for inttrrnpling you T The Chairman. Yes, sir. air. Huntington. I have been expecting to be culled here every ds since 1 was here before. As I have not been called, 1 want to goavra from here next week, and I wish yon would u.ie me if you wiint me bc^fbi that time. 1 wantto be gone thirty days. Commissioner Anderson. Where are you going I Mr. IliJNi'iNGTON. I am going to Europe. Commissioner Akdp:bson. How long will yon be gonef Mr. Huntington. rrol)nbly not longer than thirty days. Uy family aie going over, and 1 want to take a little ocean voyage, and I am coming' right back. The Cdaiuman. Wo will notify yon after that date. Mr. Huntington. I am obliged to you. g. 1 nuderstnoil yon to say yon boiigbl both stock and bomJs!— A. That is my recollection. nough about it to s{H>ak of it int«>lli^utly here to ft Commission, or 1 should give it with great pleasure. Q. Have you any books or papera from which yon c»u ascertain vt^ this mad actually cost to the Union Pacific I — A. No; I do DOtthJi I have. Q. nave yon l>een over the roiwlT — A. No, sir; not over the wljoj of it. I have only been over a jiortion of it. Q. Have you any of the bonds 1 — A. No, sir, KTiLL OWNS OKiaiNAL STOCK, Q. Have you got nil of the stock that you originally bouglitt— A. Yei, r. Q. You never parted with any of it I — A. I think not; tliat is aj recollection now. Q. You do not remember what you paid for it T— A. No ; 1 do nnt. Q. You say about the Oregon Short Line that you never beld anyol itH securities T — A. No, sir; never. ii. No bonds or stocks t — A. No bonds or stocks. tj. In addition to the statement which wc have asked you to fumiil in legard to your dealings in Saint Jo and Denver and tho Kaiisoxsuj Nebraska bonds, which you am having prepared, will you luruiitliiu with a statement of tbe nnnil>er of shares of stock of the Union Pseiflc^ ..e Kansas Pacific, of the Utah Northern, aud the Denver aud SoniJ k stock and t)onds,andthenumberof bonds oramouut of IwmlsurtlM on Pacific and Kansas Pacific unilof the Denver Pacific, whioli rep nted your ownership just before the consolidation ou the Stth liUSSELL SAGE. 389 slxonly after that lueetiug ? — A. I douot n uiembor it ; I do not recall the transaction. Q. Do you know to whom the stock went ? — A. Xo, tiir ; I do not. Commissioner Akdebson. Mr. Mink, you have not got that little statement we called for as to the issue of that stock f Mr. Mii^E. I have not. My recollection is that about two-thirds of it ^ent into the treasury of the company, and was disposed of in the place of those securities. As to the other ones, I do not remember how itvaa. It was all entered on the books of the company, and will ap- pear iu the account. Q. Do you know whether, at the time this resolution which 1 have JMtread was passed, Mr. Gould was, in fact, on the books of the Kan- «a« Pacific Company a creorteo you not know what price you got for that stock! — A. I do not amber now. . l>o you not know that you made inonr y on it, and got more than gave t — A. Quite likely. That is what we trade for. . 1 fl.iid from the report that the Union Pacific owns $6,042,500 out total stock of $6,142,800. Were jou aware that the Union Pacific 1 this amount of stock while you were a director ? — A. 1 was aware t tbey had made an arrangement, or had acquired it. It was regarded t very desirable thing for the company to owu it in order to control t Ijusiness there. J. Do you remember how much of this stock you yourself sold to the apany I — A. I do not. ;j. Do you remember whether all the rest of it that you did not buy 8 acquired or controlled by Mr. Gould I — A. I do not know that. [J. Do you know whether he sold it to the company' at the same price which he bought it from Mr. Evans ? — A. 1 do not know that. Q. Or whether he made any profit out of it f — A. I do not know. Q. As to the rest of these branch roads, can you specify whether there ere any others in which 3^ou had transactions in the stocks or bonds? — . I do not remember any. Commissioner Andeeson. I will read the list over to you, and then >vi may remember, because your memory is apt to be helped a great ^. Commissioner Littler. I will read it, as I have them here. LIST OF BRANCHES IN WHICH WITNESS HAD TRANSACTIONS. By Commissioner Littler : out ? — A. Yes, sir. ^. Atchison, Colorado and Pacific? — A. No, sir. oiids,andtbenumberof bonds oramouut of bonds of th* Uniou Pacific and Kansas Pacific and of the Denver Pacific, which rep" ~~~ " ' r ownership just before tbo consolidation on the 2itli "• BUSSELL SAGE . 39S nnBTFj 1880 1 — ^A. If you will give me a statomout of what you want fiH furnish them. SHARES HELD AT TIME OF CONSOLIDATION. 3y Mr. John F. Dillon : I X understand you to have stated tbat at the date of this consoli- Ion you held 8,877 shares of Kansas Pacific f— A. Yes, sir. Those were $50 shares f — A. Yes, sir; "half shares" we call D. *rhat would amount to about $443,000? — A. Yes, sir. ] <37hat you had 758 consols f — A. Yes, sir. Qn^nissioner Littler. What do you call consols? r. John F. Dillon. Kansas Pacific consols, oini^issioner Littler. When you say consols, we understand you efer to Kansas consolidated bonds, [r. John F. Dillon. Yes, sir. I Of the par value of $758,000!— A. Yes, sir. {. And that you held in January, 1S80, $181,000 Saint Joseph and cific bonds f — A. Yes, sir. J. At their par value that would be $181,000 ? — A. Yes, sir. Q. It is claimed they are worth very much less; the Kansas and Ne- aska $116,900!— A. Yes, sir. Q. And that you held Boulder Valley bonds $94,000 1—A. Yes, sir. Q. That would amount in round numbers, taking them at their par alues, to $1,600,000 about ! — A. Yes, sir. Q. YoQ say you held 14,700 shares of Union Pacific stock ! — A. Yes, jr. Q, Which at the par value would amount to $1,470,000! — A. Yen, ir. Q. Yon now state that you have some Utah Northern stock ! — A. Yes, ir. Q. How much of that do you remember ? — A. I cannot recall it, but '. think it is 300 or 500 shares. I do not remember which. It is not arge enough. Q. That shows that your ])ecuniary interest in the one road rafiy, for be purpose of the inquiry I am about to make, be assumed to be not iEir different from your pecuniary interest in the other at that time! — L Yes, sir. seasons fob consolidation. Q. What were the reasons, if you can recall them, which under those trcainstances induced you to vote for the consolidation of these two roperties? — A. The consideration in my mind was, after long discus- ou and consideration, that it would be a conservative act, and it would repeat new competition; and Ibelieve it has done so — thatitdidso, and ived a great many millions of dollars to the treasury of the Union Pa- Bc road. The Chicago, Burlington and Quincy had got into Nebniska 'tween the Union Pacific and the Kansas Pacific, and they were ver>' terprising, as all railroad men know, in pushing forwanl ; and by ui'- •tiatioD and management we kept them oil' for several years from extend- If their line to Denver. But tliey are there now, and I siip[K>He they II Dot stop abort of Ogden,and 1 do not know but they will go to the M^ific coast. After a good deal of reflection, the gentlemen associated the property thought it was a wise thing to prevent the consamoia- PS. PACIFIC RAILWAY COMMtSSlON. tlon of any uew competition that might lower the' tariff nitwa and di«rt hasioeas ami depreciate tlie proiierty. Under tliatuoii8i(1erHtion,«itli tho fact that those wlio, were aaeociatcd with me thought tbattbii was the wisest tiling to bo done, I yielded, as I said befon^ to ihe Commission liere, my own prefercncea and consented to this conwli. (lation. I believe to day, an I did in the commenociueiit, that thoKnn- aas Paciflc woiild have been worth more to the Missouri Pacific Bystem than we got for it in the consolidation, but tho other conaidrntlona aeemc-d to b& controlling with the gentlemen in charge of tho proiterlj, iuul I acquiesced with the sentimentthat waadoiniimutin tlit' Iworoaiii. Q. Yoar motive was not any pecuniary advantage to yourself an Um holder of Kansas Pacific security or shares, but your jadgment wastliat that was for thebest interests of the whole propertie* — both of them 1-. A. I acquiesced in that. My judgaient was that it wa» not best for uiy Kansas Pacific interest. I adhere to that to-day. That is my he^t judgment to-day — that it would have been better for mc not to hurt consented to it. Q. Your seeuntii's are generally regarded us pretty good t — A. Ytt, Htr. Q. 'So\f, was this st^beme' of consolidation with the tluiuu PaolBi] properties, as it was finally earned oat, one whiub you advocated aarn people have ; and now are tarulng down to Lincoln, crossing tbs Union Pacific, and the Chicago, Burlington and Quincy haveeittodtd their line to I>enver, and they have turned north and arc crossing tliR Union Pacific and ruuning into the northern country. It ii^ a V4tryiil> (cresting fact to be considered that such a state of things should eiitt liero to-day with twoof the foremost corporations on this contineDC Q. Going back now briefly, you stated, as I understood, tbatyoahul been for some years prior to 1880 interested iu tho Pacific IMroad mostly! — A. Yes, sir. Q. Where did that road in 18.10, now known as the Missonri PuiiiftCij tod thou also, begin, and where did it terminate, if you c:iu statu 1— A- *"f course the uiniu line was ceimnenced at Saint Iionis and went RUSSELL SAGE. 395 mssas City And to Atchison, and the Lexington branch. We had inaa- rated two branch roads extending over into Kansas, and we had oar e upon this thing to go right on to Denver, taking up the Kansas Pa- ic That is what probably induced the citizens of Saint Louis to iDch up these Kansas Pacific securities. They intended to do sorae- iDg with them. I saw the advantage, as I thought, of acquiring this oi^y and these roads, that had all failed, and I urged upon Com- )dore Gharrison their importance to our interests. He and I were the ineipal owners of the property at that time; indeed, we owned the tyority of it. By Oommissionor Anderson : Q. Theprincipalownersof the Missouri Pacific I — A. Yes, sir; I urged e importance of securing this property here, and of trying to induce r. Gould and others to unite with us, and take hold of this property. finally resulted in Mr. Gould very suddenly, and I guess without any Qsultation with any living being, buying out Commodore Garrison [1 acqniring that interest, to prevent what he thought would be a ry disastrous thing to the Kansas Pacific and the Union Pacific roads. now he told meat the time that he was very largely interested in Union cific, and he considered that an extension of that line up through rein hostile hands would be very injurious to his interests in the ion Pacific property. Ir. John F. Dillon. The act of Congress provides that the Kansas 3ific shall connect at Kansas City with the Pacific Railroad of Mis- iri. ?he Witness. Yes, sir. Ir. John F. Dillon. They do so connect, I suppose ? ?he Witness. Yes, sir. Ir. John F. Dillon. The Pacific Eailroad of Missouri, instead of pping at Kansas City, under its new name, the Missouri Pacific, had I up to Atchison on the one hand! — A. Yes, sir. By Mr. John F. Dillon : j. And it was stretching out into the territory of the Kansas Pacific, the other hand, and that was the condition of affairs in January 3U, was it not!— A. Yes, sir. Q. Do you know of any steps taken on the part of Garrison, prior to e time when he sold his interest out to Mr. Gould, looking towards invasion of Kansas Pacific territory bj' a still further extension of 18 roadt — A. Oh, yes ; he had two roads then under contract for ox- nsion, when he bought him out. Q. Can you state whether or not, as you understood it^ it was because : this Misisouri Pacific system which had already invaded the Kansas acific territory, and which in strong hands could paralyze and very inch injure it, which brought alx)ut this consolidation f State what in- loeDce those considerations had on Mr. Ames, and the large holders of nterests in the Union Pacific, toward bringing about this consolida- ion; that is, what was jour understanding at the time. Of course they !an state it better than you can. — A. My understanding at that time wras that that was the controlling argument with the Boston gentlemen in desiring consolidation. Commissioner Littler. Judge, how can he state what the under- standing was. Mr. John F. Dillon. He understood it from then). The Witness. He says it was a matter of consolidation. I state here that my own interests were in another direction attl\atl\m^^«wi3L«xft«^ U. 6. PACIFIC KAILWAV COMMISSION. that I liiid Iwi'ii a director in (be Uuioii Pacific Company '""I oniinl tills larije iiiterust, as I did, I slioiild not have Biirreiuicred n\> myoirn jadgiiient to tbis conRoIidatiou. I wan iut^rptrted wirli Couitiioilan Oarrison, a» I liavejiiat stated here, and we felt that wo had u mrt thing. The first urop bad bepn swept away, the niiofortune of a net railroad in n new country, and wh had pot a trunk line, and wweiDa vury commanding powitiou then, and have been ever aince, and are to- day. When this qaestion came np, of con»olidnlion with the Kaniu Piunlic, I was very desirous indeed of securinp that for the Miatoiirl i'lMiillc. And thiit was my judgment then, and haa been ever gin«!j and I have never cbitngcd it. USION PACIFIC PAIKLV DKALf WITU. Q. Was it .viiiir.iiiil;;ijiriit in 18S0 that tbe Kiinsas Pacitic waa put intu tills ci>iisiiliciIIu Hecnritius had. appreciatvd so tlial, iriy recollection is, iLey were selling at |10[iff Mliare more than the Union Pacific in Juuuurj*, 1880. Q. That W)is your Judgment Httbat timeT— A. Yei!,»ir; Ihatvatntf best judgment. (j. Whitt is yunr judgment to-day t — A. It Iiim nut been cbsugedit all. I would rather have tlie projierty to day than to have the otlin, It iM not ubanged at all. My judgment in that rt^'i'pet^tt La^ been elear hn any man's Judgment eonid be as to the valuta of jiro^wrt;. I may iii>t be wise in my generation. (J. Wliat was the general Judgment of the pnblic on that uuhject, L'videiiet'd by the seouritieM f Did tbpy fall or rise after the fact o[ tii» union of these properties having been consummated was known f— A. U was considered a very conservative and salulEiry act, just sa yoa,Ut; ()bainnan,s(M! it in the Pennsylvania Uailroail of your State, aiidoHfr large coriKmilions. Q, Did they appreciulB ! — A. Yea, air; they appreciated in tbe«n]. ■nation of capitalists, and the property haa been conaideretl more HlaM& A speculative value for thirty or sixty days is one thing and the per- inaiieucy of value is another. Q. I>o you know what tbe judgment of the sbarelioldera in tbe«« tna properties vib» concerning the consolidation, ns evidenced l>y their i» sent to it or otherwiso f How far did you understand the stoclu liii lieen changed vohintarily under this conaoli Kurranto suit in Kansas in l^it was fltated on oath Unit nut nl' tiiel^on.onn i^harcs iu tbe Kansas PaciSa Railway Company, ii!l nfilic. filnirclnililers of the said company, witb the exception of 31 shares, have since exchanged their shares of aioct for the stock of the consolidated company, ail of which waa doui! Jrtf* before this suit waa commenced. Is that in avconlance with the genenl &et, aa yon anderstttnd it t — A. Yes, air. RUSSELL SAGE. 397 Q. The 8 .me answer stated that the consolidated company, soon after e consolidation was made, issued its stock in exchange for the stock the said constituent companies, and all of the stock of the Union iciflc Bailroad Company has long since been exchanged for the stock ' the consolidated company, except 1,930 shares, most of which, how- 'er, has assented to the consolidation. Is that according to the general ct, as you understand it f — A. Yes, sir. Q. Your attention was called to the purchase of the stock of the entral branch. I was not present at the beginning, but I understand lat that stock was purchased — 1 do not know whether you stated it — t)m Mr. Gould. Do you know what he paid for it? — A. I do not. Q. Were you at all interested in the purchase? — A. No, sir. EARNINGS, UNION PACIFIC, 1883-'84. Q. Eeference was made to the earnings of that road from the report f the Union Pacific Company for 1883 and 1884, by which it appears bat for 1884 the gross earning^ amounted to $1,715,145.48; that the perating expenses were $1,035,318.81 ; that the fixed charges, includ- [g rent of leased lines ami interest on bonds and taxes, amount to )18,839.24; that the balance of income was $160,987.43; is that so?— . Yes, sir ; I understand it so. Q. In other words, a dividend on the stock for that year of about 16 r cent., was it not! — A. Yes, sir. The Chairman. We will excuse you, unless there is something else •u wish to say. The Witness. I will come at any time. The Chairman. I thought you had some other suggestion to make. The Witness. No, I do not think of anything. KUSSELL SAGE. MR. sage's holdings. 3|n Sage subsequently submitted the following letter and accounts : Office of Russell Sage, 71 Broadway, (P. O. Box 1468. -Rooms 27, 28, and 29.) New York, May I7tky 1887. r. Charles P.Youno, Secretary United States Pacific Railway Commission : Dia£ Sir : Your uote of yesterday is before me. I was so occupied yesterday that WM onable to prepare the enclosed statement, which your memorandum calls for, iBtil to-day. I nerein enclose statement of Denver Pacific Ry. Co. account. 1 find that I purchased, Angnst 27th, 1880, from Jay Gonld |50,000 Denver <& Sonth Hxk Ist m'tg'e bonds and 1,903 shares Denver & Sonth Park stock, paying therefor 176,071.86. I alflo find I purchased from same 689 shares Utah & Northern R. R. Co. stock, pay- ioff 17,300.76, October 12th, 1880. lalao find that I owned on Jan'y 24th, 1880, 12,250 shares Union Pao. Ry. Co. stock, and 5,677 shares (of ^0 each) of Kansas Pac. Ry. Co. stock. My previous statement M to the amount of stock was as to January 1st, 1880, 14,700 Union Pac. and 8,877 KftOMS Pac. This completes the information that was required, and all that I now think of re- lating to said companies. Very respectfully, yours, RUSSELL SAGE. r. «•(>>{ Hiipi L ■- ■■ 1. 2""^«ripi S. PAClfl Ka»>ttii Pacifi «. WilUaJU-mHW C liAII.WAY COMMISSIOS. ^ Uf nortgas» land-nniiit twnd*. ^ , liu! rtn. ■'■-:r::;':::-:::::;:::::::::-::E::::£: S^ ll-i. fc»w do, :::;;::::;:;:;:::::;::::::.:::::::;;:::::::;:: uS3 ' do. d>K — »»?.■» s.'w:; I"" Ii J; A-L .Id. u.~banifii iitC! U nliiinw, M. Dm Mill nv, Tu i< nlinriiv l^mUll & Wlniiiu. BU . . . m»lla^.1^Ju-li<.lll.l,lW 40 (uup. ctit., W. S. JuOlklDH,43 RUSSELL SAGE. 39d 791 18. S- to Asiel & Co., 77J 8.856 25 10. »■ do. 83i 20,«12 6O 2i 25» trust oert.,ABlel& Co., 97 24.250 OO 25. 1»" " do. 96+ 18,250 00 alio- " do. Ml 0,462 60 L 21* bonds do. 05i 20,055 00 8*20- " do. '94?, 18,887 50 13.6- " S.Wsrd,103 5,150 00 9l 88- tnists, Speyer & Co., 1C6 34,650 00 «. 1> bonds do. .105 17,850 00 la 9- '* &B.Jone8, 108 9.720 00 28.15- ** £.Plam,l]li 16,725 00 2.10- *• tni8ts,A.Leo&Co.,lll| 11,162 50 3. 200 iiharea, McGinnis Bro8.&F.,59 5,000 00 3.100 *' 8avin&H.,69 2,950 00 9. 10- ssaented trasts, F. Leake, 112S 11,'287 50 13.1" '* C. R. Leake, 112| 1,128 75 IL Interest on bonds, n.S.TnisiCo 32,517 36 11. " babybonds, " 17,81130 13. ** '* •• 62 72 21. 400 shares, Meyers R. d& Co., 54 10,800 00 23.600 " do. 54 16,200 00 80i ^ profit on Sage 4d Gonld account 7,406 80 3. 100-tra8ts,Spo\er&Co.,100i- 100,7«10 60 29. 200share8, U. Lapsley & Co., 58 5,800 06 8.200 •' A.Leod&Co,50 5.900 00 6.200 '• do. 60 ..^ 6,000 00 6.400 •' Cha8e&n.,66i 18,250 00 lOi 15- bonds, A. Leo & Co., lOCJ 15,918 75 10.6- •* do. 106 6,300 00 10.10- " do. 105| .'. 10,576 00 11. 200 shares, Hallgarten & Co., 71 7,100 00 28.200 do. L. Chase & Co., 65 6,500 00 21200 " Meyers B. & Co., 67 6,700 00 12. 100-reorg.bond8,K.P.By.Co.,90 90,000 00 & 18- bonds, A. Leo d& Co^ lOM 19,192 60 1& 200- reog. bonds, K. P. By. Co., 90 180,000 00 2L 800 shares, Kimball H. d& Co., 68 10,200 06 28.200 •* B.N.Wll8on,68 6.800 00 1. lOOconpons, ®$50ea 6,000 00 L 200 ** f2««oa 526 00 17. 6- bonds. J. M. Ham, 103 ». 5,150 00 28L 8039 baby bond coupons, ® 2^9 ea.+ i % 6,379 86 1 600 shares, £.H.Oppenheim, 70 17,500 00 6. 2- C. Benedict 4d Co., 102 2,040 0^ «. 8- A. Leo & Co., 102 8,160 00 13. 167 ■!. ooapons,® 2" ea 350 70 23. 400 shares, Meyers R d& Co., 68 13.600 00 80. 400 shares Meyers R. 4^ Co. 75 15,000 00 81.200 '* C. B. Ganther&Bro.,70 7,000 00 3L 200 " W. Clapp & Co., 75 7,500 00 k 19. 10- Asiel & Co., 105{ 10,587 60 14. 60- Hallgarten & Co., 109J 61,502 50 20. 25- Marx & Co., 109| 27,375 00 1. 112aA« coup, cert., K. P. B'y Co 114,392 8;^ 12. 4008hares,BeldenB. &Co.,94| 18,850 00 13.200 •' HaUgarten&Co..951— 9,547 00 15.100 " Belden B. & Co., 95 4,750 00 I.S. 200 •• Blake Bros. & Co., 96 9,600 00 15. 300 " Drexel M. & Co., 94i— 14.225 00 11800 •• AsieI&Co.,96 14,400 00 18 200 " Gracie&W..96 9,600 00 17.700 " Belden B.& Co., 96|— .-. 33,850 00 17.100 •* ChaAed&n..95 4.750 OO 17.400 •• Mills R. & S., 96| 10,850 00 19.300 •' Belden B. dc Co., 101— 15,137 50 27. 100 " '♦ 105i-4- 6,271 27 27.100 »• Kcilhalz Bros., 95 4,75000 27.1,400 •* H. H. Truman, 94 65,80000 21 100 •• Keilhals Bros., 941 4,737 50 21200 " Thomas Dennv & Co.. 96 9,600 00 15. 3,970 " couTerted into 1,085 Un. Pao. Denver Pacific B*y Co, let mtge. bonds. D. 1 353- b'ds from Jay Gould, ® 74 261,220 00 1 lO-Ham d&Mnnroe, 854 • 8.625 00 11 16-Asiel&Co., 85 13,600 00 22.18- do. 991 12,93500 ai 17- do. 991 16.91500 ». 6- do. 99* 6,940 00 17- do. 95 6,060 0(^ PACIFIC RAILWAY COMMISSION. ' IhlOM... So. 1(1 Wall Sthkbt, Nbw Friday, if< JAMK3 I{. KEENE,beiDg duly sworn ami i'san)ined,ti lowfl : By Commissioner Akdebson : Questiou. YoH vrerta for a time a director of Ilie Union lii^ve, — Answer. I wiks. Q. Do you i-ecoliect bow the transaetioii came abont T The Witness. How I became a directort Commissioner Andkrijon. Do you recollect bow it cami A. 1 tbiiik 1 went in as a director to please Air. Sa^, yestioii, rather. Q. Was it not in comieetiou witli a purchase of a lari stofk from Mr. UoulJ by a syndicitto in New York I — i iliiiik I was a director before that time. A DIRECTOR OF THE UNION PACIFIC. Q. Did you not become a director at the same time ss Mr. A. My iinprcssion is I was a director previous to that time, be wrong. Q. Your impression is, Mr, Sage asked you to become A. 1 think so. Q. What i-easons did he assign ! — A. Mr. Sage and I Mr. Gould some Union Pacific in 1878, I thiuk mtHWal the purchase was made, perhaps a few mouths, Mr. Sage si I should join the board. Q. Do you remember whether you were elcctetl at a reg or whether you were elected to till a vacancy J — A. I ca bcr. Q. Uow loug did yon remain a dii-ector! — A. Perhaps Q. Were you a director at the time of the coasolidatioD 1 was, but 1 am not very positive about it. Q. Were you present at the meeting T — A. I was not. t-i. Where were you in January, 1880 1 — A. In New Yol Q. Did you receive a notice lo attend those meetings t- I did. y. Were you then the holder of a large amount of 1 stock t — A. I do not think I was theii. Q. Do you remember the eircumstauees which caused j lend these meetings iu Jauuarv, 1880 f— A. I do not tbii attend many meetiiigs of the Union Pacific, from the tii elected until another person was elected in my place. 1 Q. Do you remember the circumataiices of consoJidatM it excited much iuterest at the time ?— A. 1 believe it en WASHINGTON E. CONNOR. 401 Q. Do you rameinber whether you had any definite opinion before the )u8olidation ; were you in favor of it, or against it f — A. I do not think took any interest at all in it. Q. Did Mr. Sage call on yon shortly before these meetings were held B regard to itf — A. I do not think he did. Q. Do you remember having any conversation either with Mr. Sage irany other of the directors, just before the consolidation, bearing upon tt^A. I do not think I had any. Q. How long after the consolidation did you remain a director f — A. believe I answered that I thought I was a director when the consoli- lation occurred, but 1 am not sure; but if I was at that time I went »at at the next election. Q. You remained until the close of the year ! You did not resign ? — L I did not. Q. Were you not reported on the minutes as being present at the leeting in January f — A. No, sir. Mr. John P. Dillon. He is not reported as being present. JAMES R. KEENE. Ko. 10 Wall Street, New York, Friday, May 13, 1887. WASHINGTON E. CONNOR, being duly sworn and examined, tes- ified as follows : By Commissioner Anderson : Q. What is your occupation ? — A. I retired last January from active Qsiness. Q. What was it prior to that! — A. Broker. Q. How many years were you a broker ? — A. Twenty-one. Q. In the city of New York f — A. Yes, sir. Q. Where was your office in January, 1880 f — A. I think it was 80 »roadway. Either 80 Broadway or 23 Nassau street, I am not sure tich. Q. Who were the members of your firm f — A. The firm at that time as W. E. Connor. I think the firm of W. E. Connor & Co., was formed boot 1881. Q. Had you entire charge of the business of W. E. Connor f — A. Yes, ir. Q. Was no other i>erson interested f — A. No. Q. That is, at the time of the consolidation of the Kansas Pacific and Jnion Pacific! — A. Yes, sir; I think at that time the firm was just W. S. Connor, in 1880. Q. Are you positive! — A. I am not positive. Mr. John F. Dillon. That date was the 24th of January, 1880. The Witness. I am quite sure 1 was then alone in business. Q. What was the title of this firm that was formed either in 1880 or 881 f«A. It was W. E. Connor & Co. Q. Who were the members of that firm f — A. Mr. Morosini, Mr. Jeorge Gould, and Mr. Jay Gould, as special. Mr. John F. Dillon. And yourself. The WrTNESS. Yes, sir ; and myself. Q. Did your business keep on in the same office which yon had oc- apied before t — A. Yes, sir. 9. Did yon keep on employing the sanie clerks t — A. Yes^ sir. [iAII,W\y COMMISSION. Q. Dill yon uite tbe •aini; books f — A. No. y. You Hlarteil anew set of books? — A. Yea. olh j'ou and myself, would be [okrj u Iii"il.-tii<|»'i no iliereaiid take off astatemonl of all the Imiisawinnf iliiil,\')ii iii'i'd I'liitii iliti bookH. {;oriiiiii-^«irocoe(IiHs. (louiniiRttioner Andi'.bson. No; we have got enough to do. The WiTNKSS. 1 Ihink one manwilldo,with my bookkeeper, wLouo. derxlands tbe bnokrt, aud who ean get at tbe information, of Cuaw, very readily. I think one man, with him, would get at itjnstasTeftdOjr jiH if you had more. Q. Do you think he euuld get ihrough in two or three daysI-A, I shouKI think BO. The truu^aetious are not numerous. Yon are noR referring to KauNus I'ueiliu seetiritie», I suppose f CumniiHaioner A^DJJ^80N. The Kansas Padflc seeuritieti, Oeam 'ucilio aeeuriticH, and any transactions relating to branch roadxin '|ich Mr. Gould appears to have acquired au interest, if there be inj, 'branch roada being Iho branches of either the Kansafi PiwiOo or in Pacific. le WiTKBHu. You understand that raostof these securities werenot id on the Stock Exchange, and consequently the flrui did nottrule ami whatever buying was done was not done through fflir Mffilit nut your riviu\vAV«Uivo*at\\'J\v&fcv\,\K.\*!,a.ttvi'^w.vs\!M*sl(*"i;tiick JOHN H. HAAR. 403 a did make yoarself, but where unlisted stocks were deliverable to uY — A. Very seldom tha.t occurred. Mr. Gould generally makes his msaotions direct. * Q. Can you inform the Commission what house did his business as to *8e particular securities T — A. It is my impression that the class of purities that yon refer to were held in bulk by a few individuals, and it Mr. Gould made his tranractions direct with them or through some t«ide broker. 3- Can yon state to us the names of the individuals that you refer to holding these securities in bulk T — A. I cannot, because I did not see ^ny of these securities, and I know not how many of the transactions, toy, passed through our office. 3. Do you know Mr. Hanna ? — A. I know there is such a man. I do b know him personally. j. Do you know Mr. Hasslcr ! — A. 1 do not, only by name. 3. Do you know the fact that the Guaranty and Indemnity Company Ld some of these unlisted securities that you refer to? — A. I did not owit 2. And Mr. William Bond T — A. I did not. Jommissioner Andebson. I think the best thing would be to get the 3ie8 from t)ie books. E). Do you remember the fact of the consolidation of the Union Pa- le with the Kansas Pacific ? — A. I do not remember the particulars, "emember there was such a consolidation. Q. You took no personal interest in the matter yourself at the time len it occurred t — A. I had no personal interest in it. If I acted at I, I did so in my capacity as broker. Q. Do you remember signing a ratification of the consolidation ? — A. 3o not. Commissioner Anderson. Please examine the list as representing « Union Pacific stock. The Witness. If I signed at that time it wa^ merely, as I said before, a broker. Q. Do you know on whose behalf you signed, if you signed at all 1 — . Probably in the interest of Mr. Gould. Commissioner Anderson. I think we may as well suspend this gen- ?man^ examination until we get the account. The Chairman. We will excuse you. The Witness. Any time you are ready, if you will send over, I will ive my bdokkceper go up there with anybody you select. Commissioner Anderson. Very well ; we will select a bookkeeper ho will go. W. E. CONNOR. The Commission then a(\joumed to Saturday, May 14, 1887, at 10 a. m. No. 10 Wall Street, New York, Saturday^ May 14, 1887. The Commission met pursuant to adjournment, all the Commissioners cing present. JOHN H. HAAB, being duly sworn and examined, testified as fol- By Commissioner Anderson : Qaeatiou. What is your present occupation ^ — A.us>\\Vit. \^toV«t» U. 8. PACIFIC RAILWAY COMMISSION. Q. Where 18 your office I — A. lUO IJroatlway. Q. Wliere was your olHce in 1879 1 — A. 8 Broad strevt. Q, With whom were you iheu iu business T — A. I wbb there for my- self. I was wUL tlie oflice of Kaven & Oo. Q. You say yon occupietl the Kame offices t — A. Yes, sir. Q. But your business was s<;{)arate from theirs T — A. Ye«, air. Q. At that time were you in the habit of Uealiiif; in the stochKaml bonds uf the Saiut JoHepb and Denver, afterwards the Saint JuMqih ami Westem Railroad Comjiauy f — A. Yes, sir ; at that time and helorK. Q. Have you books containing those transactions f — A. ldouulb^ lieve I have. Q, Were those transactions transactions which yun had as liruker, for iudividual customers of your own t — A. They were indtviduii] ua tomers nnd f'ir myself. I traded iu tiiem considerably. Q. Did Raven & Co., also trade in them t — A. Yes, sir. cconie of yoar books T — A. I guess they arc aroBud some place. Q. Can you Ixt a litlle more siiccific T — A. 1 do not know whir I have got. thcin home or whether iu ray office, or whether I destro.vn] them; it is just memoranda that I kept myself; I did not keep n wc uf boolcs. Q. Who were your principal euslomers In these socuriticst— A. Pm- mistuioHsly. l5v«rylM>dy that knew something about the property. Q. Did yon not have a numbiT of transactions wiih Jay Gould I— A. I do not know th:il 1 htitl any direclly with him ; I tuuy Imve had vitli (he Arm of W, K. Connor & Co. ; I think there were one or two tmiw- actious with him. Q. Werethey large transactions! — A, No; not at that time, I IlilnL y. At what time did you have large transactions with the UnnofW. K. Connor &<'«, relating to Saint Joseph and Denver necuriticsorSainl Joseph and Western securities! — A. I had l.irger transactioiis with Hoar & Co., at 45 Wall street; that was previous Ui IST9, IlioiigL Q. How lonp previous! — A. Kaugiug, I think, from I8~-l np. KAIXT JOfiEPlI ASD DEKVKK. _, ])o you know that road, the Siiint Joseph and Denver t Uuvcyou ' 'ever been over ilf — A. Yes. sir; lots of times. Q. Did you know it well in 1878 1— A. Yea, sir. Q. Please descrilw what kind of a road it wits us Ui structure k population and tmstuc^s and travel ! — A. The population at that (ia was very slim, but growing all the time; the road was very crook* from Saint Joseph to Marjsville; very poorly built; the WBHteni por tion of the roail was a pretty straight roiid, aud fairly built ; better. Q. That Is, from Marj'sville to Hastings! — A. From M»rj*Rvillo Hastings; yew, sir. Q. At the time you went over it was the branch ftom UastincB to Grand islaiid constructed f — A. [n 1R7S 1 do not believe it was; I b* •inve they wero spcakiug of it then. Uo'you reuiumber the occasion of a foi-eclosnre when it wjisreor- 1 in two divisiontt as the Haint Joseph and l*acifie,nnd theEafi' Nebraska! — A, V'-s, sir; I rcmembiT that. JOHN H. HAAR. 405 Q. When did that rcorgauizatioii take place? — A. I do not know Lether it took place in 1876 or 1877 ; perhaps 1875. Commissioner Anderson. Was it not in 1877, Mr. Holmes t Mr. Holmes. I cannot answer immediately. Mr. John F. Dillon. It was stated here the other day ; I do not ^collect ; I think it was about that time. The Witness. I do not recollect; I think it was 1876 or 1877. Q. After these divisional bonds of the Kansas and Nebraska and of le Saint Joseph and Pacific did you have dealings in them f — A. Yes, r. Q. The first-mortgage bonds ? — A. Yes, sir. IXUE OF KANSAS AND NEBRASKA; AND OF SAINT JOSEPH AND PACIFIC SECURITIES. Q. Have you any actual transactions that will give us the fair arket values of those securities during 1878 and 1879 1 — A. The only )r8on, to my recollection, that bought the bonds was myself, and I be- )Te I paid as high as 15 for them. Q. During what year are you speaking now; shortly after the reor- inizationf — A. Shortly after the reorganization. Q. Forthefirst mortgage bonds? — A. For the first mortgage bonds; id on the Western Division as it was called, which was called the Kan- L8 and Nebraska, the second- mortgage bonds and stock were thrown . ; there were no second-mortgage bonds issued on the reorganization r the Eastern Division to the first-mortgage bondholders. Q. With the Western Division the second-mortgage bonds were tirown in on all transactions had relating to first-mortgage bonds? — A. 'es, sir. Q. And those purchases, when you first commenced to deal, were as owas 16 per cent.? — A. Yes, sir; lower than that; I bought some K)nds as low as 6^ and 7 cents, in small quantities, with the <^trim- DingSj^ as we call^ it. Q. The " trimmings" thrown in ? Will you please describe to us the progress of those investments in the market here from the time you first tegan to buy through the years 1878 and 18791 The Witness. Do you confine me to 1878 and 1879 specially ? Commissioner Anderson. No ; give us any dates you please. — A. I >iiimenced to buy those bonds from 30, after the reorganization, down », as I say, 6J ; and I guess I owned over $000,000 of them myself. Q. These two divisions promiscuously ? — A. Yes, sir; I could not tell >ii particularly what they were, whether they wore eastern or western .visions. Q. Can you tell about what these $600,000 bonds average, or what ley cost you for the whole lot? — A. I could not exactly tell. Q. They were bought from 30 down to 6J ? — A. Down to GJ, a very nail quantity. Q. In what year was it that you had acquired $000,000 of these onds t — ^A. I guess I had them in 1875 and in 1876, or along there; or 1 1877. Mr. John P. Dillon. Poor states that the road was sold under fore- losure in November, 1875. Q. That was when Mr. Bond was appointed receiver ? — A. No ; I liink it was reorganized in that year. In 1874 the receiver was ap- ^nted. % It does not follow from that, of course, when the reorganization ^Op " p. 8. PACIFIC EAILWAY COmn>^!-N- irafl tSieclMl, anil wben ili« tlirt^tooal bouits ft|>]>fatvid you dispose o( all o( Ibem in that way t — A. I believa I bid Hunie left after ISTS and 1879. Q. Cao yoa tell ns about tbe market price of tbem in 1878 1 Wu it verj' much f — A. There were verj' little dealiugs in tbem. AnJibe pricv was almnt tbat time principally mameb.»Dds, «126,UUO or $127,000 at Sjin 1877 or 1878, ami 1 ko1<1 llicu at 1:;}, T believe, and tUey mn along up as bigb as JO. Q. Wbat tranuactioos can yoo leler ns to between yuuniulf and tlio firm of Wasbington E. Uonnor&Co., relatiug to these securitttw T— A. ] believe tbat some one came to me and aubed ue if I bad some of tboK boudx for sale, and 1 told tliem 1 bad, and 1 believe I sold tbeiu HOioeai 3U. in ba<>ak there froin Iim- say, aH to what he paid for thone Hecuriiiba. FBOU WHOM UOtTLD BOUOar. Vou conld suggest to us through what channelB he Itouglit tiiem then wo conld tall the witnesses. Do you know fVom wboio Mr. Qould bought his bonds)— A. lie Iwugbt, »a I remernVr, Ibe bohdB from tbe diilVrei.t. (rust.s companies tbat loaned money on them iit tto time I wua willi the firm ofTanner & Vu. Q. What wa« Tauner & Co's. conucctiou with itf — A. They plflced tbe oHgiiml bonds on Ibe miirket. Thoy were building tb" roiid. (J. You mean by the original bonds, not Ibe divisional l)ond«T— A. I mean the Saint Joseph and l>enver City bonds, wben tbey werefinrt plaeed on the miirki't. Q. \Va.s ihi' (lnar;tiii.\ iirid ludoinnily Company one of tbeniT— ^ TbuOnaninly ariariy that was at the corner of It roadway ud m atreet t — A. No, sir ; that was down here in Exchange Plaw. that comiiany Blill in existence i— A. I believe not. ■ bo was the Dniini-ial oflicer of tbe company, who would kuow .. Ht — A. 1 ennld not fell you. 1 coubl lind out for yop, lioweVt^. ink tbe <'itmni(r(i;il Wiirehonsc Company bad Home. I» that a ec>rii|>.iri\ riMt is still in existence I — A. No, sir. Who wtiN Hie liiiiiiic'iiil iiffleer of that compauyT— A. I tlilnli it "avano. 1 liiink so. Navarro J — A. Yes, sir; and Jolin F. Itaird. >WhitI other company can yoa refer toT — A. The New York Wum- " Security Company, John u. haaH. ' 40? }. Who were their officers ? — A. I tliiuk Ilezron A. Johnson was the udeiit there. I think he was the |>Fe^^ident. I atn not sure. I- Is he living to-day, do yon know t — A. It appears to me I saw him at a month ago. (. Is he a New Yorker f — A. Yes, sir. !. Are there any other names that occur to you? — A. The Mercantile 8t Company, 1 believe, had some. |. They are handy. Did you hear anything of a i)ool that was made liere in New York for the purpose of selling these bonv^T vit^^ ^vA^^ U. a. PACIFIC QULWAT COMMISSIOS. jodgiog from yoar kiiuwietlge of Uie necuritieKand tlie manner in wbirii rbvy vcre beUl t — A I ilo not quite uiKlenstand the queiitlnn. 1 ItelirTg in llieiwirl880 OuuimlMioner Andkrho.v. At tlivvut) of ISTHnnd l»«ii:innii>ii im. A. (Conliiined.) In l>s7!t I (liinkyoiivoulrl bnveitotiUiic Imnilii. Then WHS it iluniiiiiil for Itiu i>onM>d of on ttio market and tlio wtiolu issue Kold »t fW or 85 1 — A. Tbcj cniild not Iiiive boeu sold, nil of ttieni, I thtuk. I do not tbink Uitn mm » umikut forlliHin; of courHtr wejudfifcof tbo market. If KODiPone makvH a bid itnd we can aelt tiiem on tlie bid it dejieuda npou the qnon- tity tliey want; it dejiondH on wliat tbey want. Tbey may want lint live. If we iiiako a naln that eHtabliidieft tbe bid. Q. Have yiiu any mean'* of formioK a judgment at about wbat price tbo boniLn would Jiave been diH]>oHed of by hiicU naleK T Ifitittm^ Ciipsn-work I would not ask you. — A. It would l>e merely gnes-swork. Q. UiMMnliui; all market priceH, fi-om what you know of itii eaniiogi lit ttie time, wiiat in your Judgment was tliefAii' value of tlxute boniisoB ■ be l«t of January, ItiSI), u^hWiI by tbo roa*) uiii) it« earnings!— A, About Alt uuiiti*. it wa«a growing and i norwiHl ng property all thetinb rupulatlon wiu voming ill tbore very fiMt and immtgrattaii waswHing in. Little t'>wiiit tbat |)mb;ibly bad l>iii-n tliere one yviw, and tlie neit year wlieru tliuru wure two biiudreil or Llirou bnndrud, tberu would pw. ba|w liu eight or uiiio buudred. It wa<4 u vory fast-growing contitrj, Q. Do you know anything about the KanwM IJentral bonda T — A. Ko, (tir; I do not. Q. Do you know anytbini; about tho Saint Joseph Kailroad Utiifi Drftt-mortgage bondst I — A. I know tbey were in exiciteiice. Q. Do you know anyllnng about their value at tbe »ame poriiid,tlit end ot l«iftT — A. The bonds were beld abroad), I believe, by one party, 1 know at one time I eould baveliougbt them at 75 cents, tbe whole !■■ KUH. I wiM trying lo get up a jkkiI to buy them. y. When wastbati— A. That maybavo l)een in 187& or 1880. Ido not rememlier tbe date, 1 Rold ho many things. Q. Do yon know bow these lionds were acquired by Mr. Ootllil,{ir from whom I — A. I do not. Q. Who iit Ibid party iu I'lunipu wbo is «nppo«ed to havo kU tltcrn T — A. 1 tbink it was Kutten & Tlonn. Q. Tbnt in tbe gentluuiaii who wa» lieref — A, Yen, sir. Pvrliip* Donncll, Lawnon vS; Simpnon may give you some information ■bailt those, Q. Do you know about the value of the (Jentral Ilrancb Union Ti- olHol — A. No, sir; I do not. (J. You know wbieli eompany I refer toT — A. Yes, air; it rao (Wo Atehliton out t-o Watervllle. I believe tbey have extended it linca then. |iIi «itlici' iiml si'DtoDbcnv TIh-.v \\\'vv irnliiMi-irl in Mr. liund's n-nort, Kiimmarl/.c(l, a« r«c(fiver. i}. ] I iH Tt'iiiii fH lite on Jilt- at Tupfku I— A. Tlii; rt'portit v^rv pnbliiAo] ill [.;ltli|ililfl. lollil. Ol- Miivf .VfHi a ra|).v of those paiiiiililwtaT — A. I liiivv KOmt-wbcrp. I ilo not know exactly wliere tbt'y ar« now. UuiiiiiMfNioiior Amikkhos. Uave you, Mr. Holm©*! Mr. H01.ME8. No, mr. CummiHKioner Asdbusos. \Vu will aak ,yoii to look IbBUi up, if jcn can. ^ Tim WiTKEsa, Very well, i will see if I wan find any. Q. Thfl optH-alinj; expcnst's, and taxes, and tlit^ cliarKes of that natun fur 187H nliHorlK'd iliu earninH**, without leavinRauylhinR over forflid eliarjicB, except a lew Innidrcd dolIarH f — A. A few hundred dollnni. K-k on tbe SaintJusepb and PaciGc road Id tbe reor}:anix:iiiun there were also second mortgage Itouds OD Uiia Sailil .Insepb itrid IV'ilie, which wvro given in i-ettlemeiit of the cOD- tmelont'ebiimsat Sjtint .lo^epb. lln tbe Western Division we orgaoiUfl the Kiin.siti and Nebrtu)d Itniiit, and the tWtera Division were not AC(?are not. The lund was deedetl to Mr. Bpitw-i woHli .111,1 MMMlf^is (rasters. '.' ■■■ bind gmnl mortgage made T — A. \'cs.8ir; fiirtlw I.. -np. ' of that that the amoant of the new uorlgafCW per cent, and on the Western Division th^re was 2J per cent, a^j- sment, I think; I am not quite positive. J. In what year were these exchanges substantially completed ! — The sale took place in 1875, and all the bonds exchanged during 5 or 1876, and the new bonds were dated in 1876. 1. In regard to^the transaction in these bonds subsequent to that :e, what knowleuge have yon of such transactions ? — A. My firm was ding in the securities continually. }. Do you remember the price at which they were bought during these ly years of their issue ?— A. During 1875, 1876, 1877, they were ight at from 5 to 10 per (;ent. ; various rates. Indeed, I purchased ) certificate of bonds deposited in the Trust Company for $10,000, ids of the Western Division, upon which 2J per cent., I think it was, essment was to be paid, and for that recei])t of $10,000 bonds I paid X). That was at the rate of 1 per cent., the assessment to be paid. 0 not think I paid over 10 for any of the bonds which I purchased. ^ Do you know of any transactions in which Mr. Jay Gould or W. Oonnor & Co. were interested, relating to these securities f — A. I had Dsactions with Mr. Oould in relation to them. 2. Please state them. — A. In the fall of 1878 Mr. Bond informed us the executive committee of the board of directors that Mr. Gould old take the whole amount of bonds controlfed by us, and by various ist and other companies, at 10 cents on the dollar, and we talked it er and decided not to sell them. Shortly afterwards, within the next 0 or three months, Mr. Bond said the ofi'er was increased to 20 per it. I still thought at that price it was a fair gamble to hold them. March, 1879, he informed us that Mr. Gould would take the whole of em at 40 cents, and that several of the trust companies had agreed to ftt if we would agree to it ^ and, inasmuch as I controlled a large uum- r of outside holders, besides simply my own bonds, they desired my Dsent to it. I then consented to it and made a sale to Mr. Gould. SALES OF BONDS TO GOULD. Q. How many bonds did you sell? — A. I had personally about $159,000 the first-mortgage bonds, with the " trimmings" or " tails'' attached, d idso extra stock. By Commissioner Littler : Q. The "trimmings" and " tails" went with the bonds at this price t — .The price included the "trimmings" entire to the first-mortgage Hids. By Commissioner Andebson: Q. You would not have them go naked. Do I understand that the 150,000 coverexl all the bonds that you transferred, and also those that HI controlled t — A. No, sir ; those were bonds of my own that I picked 3 at various prices. Q. What other bonds were included in this transaction t — A. There ere bonds belonging to others of the directors. I delivered the bonds donging to Mr»Huidekooper, of Meadville, Pa. 412 U. B. PACmc lUlLWAt Q. How many t-^A. I thiuk he had tOOyOOO of fbem— I wffl ntbij quite positive about the number— and bonda of Tariooa other penoaii customers. Q. Do you kuow what was the total amount of bonds that voa d ered in this transaction t — ^A. I do not remember. I was not gmng ' great personal attention to the matter myself. 1 only went on oosi sion with a lot, I think, of $B0fiO0 bonds to Mr. Oould myselC Oa other occasions they were delivered by clerks. Q. Were these bonds delivered at Mr. Gould's personal offlosy or E. Connor & Co.'8 office t — A. I do not remember W. E. Connor ft ' I>ersonally in this transai*.tion at all. It was at the offlcei comar of ! sau street and Cedar, I think, upstairs. Q. Do you know whether you received the check of W. E. Ooods i Co., or of Jay Gould t — A. 1 am quite certain It was Jay Gould'iii I remember it was. Mr. Gould came up toward me, and I handed the packafi^e of bonds, and we talked about the matter a little. Soi so that in exchange for $10,000 of second^mortgage bonds, wiik ** trimmings,'' which I was to retain, I was to hand him a oerti(tal$( 1^000 shares of the stock. We discussed that. Ho said, '< Will joi i thatt » I said, '« Done." He said, <' Hand them to Mr. HofOstnL' handed him the bonds. He counted them over in my presence, SDd> left, and my clerk waited and took Mr. Gould's eheck. I think was $60,000 in the lot. I attended personally to that transaotioa him. Q. These deliveries were made in different parcels t— A. NotiDj one time. Q. Was the payment made in one check or in various oheoki l-iij Various checks, as they were delivered. Q. This transaction must be entered in your books T — A. I presoni^ it is in the books of Uassler & Co., but unfortunately I had clerks wko did not enter everything, so that I cannot now say. ' Q. Uave you looked to see whether they were entered? — A. I knot there are some transactions entered, but not all of them. Q Will yon furnish the Commission with the entries that you havet- A. I will endeavor to do so. Q. Can you ^nve us the total amount of bonds that you delivered, ai near as you can estimate it, subject to correction from your books!— A* I should put it at $250,000, although I may be mistaken. There may have been, and probably was, one or two deliveries that did not p» through the books, being delivered for other persons. Q. Do you know anything about the deliveries made by the tnwt comi)anies at the same time of their bonds?— A. I knew from inform«- tion from Mr. llezron A. Johnson, who was connected with oneof thea that failed in Tine street, I think it was; and from Mr. John Bairi, who wa^ reeeiver of another one that failed, that they delivered their bonds. They informed me so at the time, and from General Fitzgerald in regard to the Mercantile Trust Company's bonds. Q. These gentlemen, whose names you have given us, can give us th6 details of the bonds delivered by their respective companiesf — A. That I cannot say. I su]>i)ose so. Q. Did 1 not understand that they hacl repoited the deliveries to you!— A. They infonned me. We talked it over. We spoke of it very frequently afterwards, because the price of the bonds advaoded so rapidly in the market alter we had made our sales, and we wtfs ^'Sgustcd at the transaction. When there were no bonds bere, ■1(1 95 was bid Vor U\e\i\, w^^Mt "^Uea^K'' . CHARLES W. HASSLER. 413 I. Are yoa familiar with tbe trausactious in tlie Stock ExcLan^e in ird to dealings relating to this class of securities t — A. I have been, the labt few years 1 have not been so familiar. |. Can you tell this Commission, from what you know of these seen- », and the condition of the road, and the manner in which the bonds e held here, whether it would have been a possible thing in Novem- or December, 1879, to have sold a million and a half of them at at the prices which were quoted at the Stock Exchange! — A. The ^ were never quoted at the Stock Exchange, iommissioner Anderson. I mean of the unlisted securities. "be Witness. The quotations were furnished to the papers, either Hasfiler & Co., or by a combinatiou, taking prices given by ditter- brokers; taking the bids and the price asked at that time. J. Who would publish these prices I — A. The Commercial and Finan- [Chronicle. It sent around to different brokers dealing in these ttrities, asking them the prices, and the Chronicle published the ubined quotation. J. What do you mean! — A. I mean if one quoted as 90 bid, another bid, another 95 bid, or quotations of that kind, then thoy would )bably take 92^ as being a fair quotation for the bonds. 3. How far would quotations taken in that way, not embraced by otatious in the Stock Exchange, form a fair guide to decide whether iDsactions had sictually occurred at that figure! — A. It would be a ry unfair guide. No guide at all. 5. How far would it be a fair guide to form a just estimate of the Ineof the securities referred to! — A. None at fill. 3. It simply, then, amounts to a stiitement that somebody interested tbe securities supposed they were worth that amount! — A. They ght give that quotation for one bond in order to keep up the price, en, again, they might wish to buy a large amount at that price. }. Living the market quotations entirely out of view, and judging m fvhat you know of that property and of its earnings, and of its ^tion and location and situation, what, in your judgment, at the 1 of 1870 were these bonds fairly worth ! They were the bottom bonds, mderstand; the absolute first-mortgage bonds! — A. No, sir; there « a receivei''s indebtedness of, I should think, about — well, a receiv- 3 indebtedness ahead of the first-mortgage bonds, which was bear- ^10 per cent, interest, and had an accumulation of interest upon it m. To reply to your question, I should think that the bonds were t worth more than 40 to 50. By Commissioner Littler: ). Do you base that valuation on the value of the property on which issecured! — A. On the value of the property as not earning anything speak of, and other roads coming in competition. It ran then only Hastings, and had no connection. It was very poorly built. The iDt Joseph bridge was in litigation. SAINT JOSEPH BRIDGE BONDS. Q. What is your knowledge of the Saint Joseph bridge bonds! — ^A. ery slight. They were held by parties represented by de Neufville, idDonnell, Lawson & Co., knew more about it than I did. I did not ly attention to them. Q. Were they held in one block! — A. I understood they were. Q. Did you know anything about the bridge itself^ and the i!ao\ie;s ■«14 U. 8. PACIFIC RAILWAY COMMISSION. exi>end kl id eoDStracting it 1 — A. Tliv bi-idge sei-mcd to lu yoa know anylliing of the Kansas Cetilml T— A. Ko, m; I i not. Q. Kothing wbaleverl — A. No, sir. Q. Do you know anytbiog about Uull County bonds! — A. Ko,ti TboHO county bonds were sold long before I bad auytbing todo wfdii Q. n'bat was Ibe market value of the ix'vuivi.'r's certifii-.Hted t—J They nuru jduced at par and nsed fur the payment of taxen. liy Ibe (jQAiauAN : Q. Dave yoa any otber iuforuialion wbiuh you can give to tb^CaiD'- ntiseion cooceruiug these transactions!— A. 1 do not know. GotDiniBsioncr Aniierson. Wo would like Ici have tlione pHuIed IwoVs, if you can find theio. The Witness. Very well, 1 tbink I win tind tbcui. Commissioner Akdebsox. Also tlio details of tbo^e IraiiKiiuliiiDNu Ibey appear in your books. The Witness. As far a» tbey go I will furnish tbein. 1 do nollcnofl tbat the books euver the ubule of tlie transaetions. I!y Mr. ■TonN F. DiIvLON: Q. Had you nnytUing to do wilb Uie original placing of ttiose iKiodt of the Haiiit Josepb and JJenvcr Citv road ! — A. No, bit. Q. When were tbey plaeed!— A. Tbey wereplnwd in 1871, l&72,aid 1873. The first default in interest whh made in 1^73. Q, What bad Iteeii the market value of them jtrior lo 1874, nbenftt bard times eanie (in ! — A. The bonds were sold on isnbscrlpt ion, sail wKi ealied, at 'M cents uii Ibe dollar. The latter part of tbe year Ibt^y via$ selling at almut ;!U. Q. The fall of 1873 bankrupted a good many mads T — A. Yed, n Q. Tlie receivers were very thick thnnigh the country! — A. Y«,iiii! Q. At what time was Mr. llniid appointetl receirer of ibis ronilt—A< I should say it was before 1873. AC the time of the two suits. Q. The suit in Nebraska, on tbat portion of Ibe road IbereT — A. Thf Nebraska suit was on the Western Division, and Kansas MUt on lb Eastern Division. Q. Those were Ibe tiro suits tbat foreclosure got tbrongb In 18T3!- A. The sale took place in 1875, but the receiver's certilleatOM, I lliinb were issued in 1877. Tbey were issued for one year and renevaUefi anotberyear. Q Tben the road did not, on the reorganization wliieb took])tHceu( der tlie decree or decrees of 187.'), go out of tbe hands of the rectnverl- A. No, sir; it continued in the bauds of tbe receiver. Q. It was reorganized in one BG<;tion, as tbe Saint Joseph Slidl'i ciflc! — A. Yes, sir. Q. And in anotber section as tbe Kansas and Nebraska!— A. Tw^ sir. Q. And Mr. Bond was continued a.s receiver f — A. Vi-s, wrj f ''xtcd [iresident of both roads. CHARLES W. HASSLEB. 415 MB. BOND, BBOEIVEB, ELECTED PRESIDENT. 1. Do you recollect how long it remained in' the hands of the re- rer t — ^A. I left the board of directors at the time of the election in 9y which was, I think, in the summer of 1879; and if I mistake not, was then the receiver of the road. ). So that the receivership continued after the judgment, as you oUect it, which was about 1875 until 1879? — A. I think so. I am i iK>8itive. 2. It is not a very favorable atmosphere for railroad securities, under 3ceivership to flourish int — A. It is the universal experience that it lot. ). These transactions to which you refer with Mr. Gould, you fix as Dg in March, 1879. That is about right, is it, according to your iollectiont — A. Yes, sir. J. You parted at that time with all your interest in the property ? — Yes, sir ; excepting as I purchased some afterwards. J. What was the western terminus of the road at that time! — A. stings. 2. About how far distant is that from the Union Pacific line? — A. I not remember. dr. Mink. Twenty-five miles. Phe Witness. I was going to say about 25 miles. 2* At the time of the transactions, and all of them about which you re testified, the road had no through connection' with the Union cific. It stopped at the little town of IlaRtingsf — A. Yes, sir. It 1 a through connecti9n by the Chicago, Burlington and Quincy road, ich ran from Hastings to a point on the Union Pacific. ). Do you know when the Hastings and Grand Island extension was de t — A. I do not know. J. It was made after March, 1879, was it not? — A. Yes, sir ; it was. ere was talk of it before that. The proposition to build it vvas sev- il times presented to the board. 3. What, in your judgment, would be the effect on the actual value the proi)erty of an extension in its own interest to Grand Island on ) Union Pacific line ? [/ommissioner Andebson. From Hastings to Gr3nd Island ? Mr. John F. Dillon. Yes, sir. A.. It would have a tendency to increase the earnings of the main e, if proper arrangements could be made with a connecting road at e other end. Q. You did hear that this line had been extended from Hastings to rand Island, did you not ? — A. Yes, sir. Q. And that it was consolidated prior to 1880 with the Saint Joseph id Denver City ? The Witness. You mean with the Saint Joseph and Western, do you at? ONSOLIDATION OF SAINT JOSEPH AND PACIFIC WITH KANSAS AND NEBBASKA. Q. Do jQn know anything about the consolidation of the Saint Joseph nd Pacific and the Kansas and Nebraska into the Saint Joseph and Vestemt — ^A, Certainly; yes, sir; that was consolidated. Q. In what year was that?— A. If you will allow m^ ow^ m\\iw\fe^\ Bve a pamphlet here which has the articles of conaoU4a\\WiSxi\X.% ■.■ . > 416 U. s; PACmO RAILWAY OOXMOMDOIT. Mr. John F. Dillok. Certainly, look at it and anBwor. The Witness. These are the articles of oonaolidatiOB. I present ter a popy of the by-laws* Mr. John F. Dillon. They are not dated. The Witness. It says: ''The day and yeu first above Writtei.' ^ was going to say 1877. I do not remember the date. It wai "'"^ dnriug the summer of 1877. 1 went out to the meeting, I Q. Those two roads, the Saint Joseph and Padflc and the and Nebraska, were consolidated in 1877 t^-A. Tes, sir. .^ Mr. John F. Dillon. It was on some date prior to Mai^ 13, un,l^ take itjbecanse that is the date of the adoption of the by-laws T The WITNESS. Yes, sir. Q. What was the length of that road at that timet— A. I tliiiika^ road was 226 miles long. . «; Commissioner Andebson. That is, the Saint Joseph and WeeWKT: Mr. John F. Dillon. Yes, sir; the Saint Joseph and Westan. Q. Do you know anything of the acquisition by tiie Saint Joseph erit! Western, by way of consolidation or purchase, in the year WlttUMi Hastings and Grand Island road t— A. No^ sir ; that was proposed InJkj consummated after I left the direction. Q. Assuming that in January, 1880, parties in interest of theXJl Pacific had a control of the majority of the stock and bonds of road, and had made an extension to a connection with the UnioD ^ so that there were harmonious relations between the two, what would that have, in your judgment, on the value of the proper^, < in its intrinsic value or the market value of its securities t— A. It BJltti have a beneficial effect. It depends upon which road had the gRNwi interest. Q. Would not such a Btate of facts account, in part, for the eDhsaeel l)rice of these securities which yon have given as occurring in 1879, ate you made your sale ? — A. The reports here in Wall street had moreto do with it than that. The reports that the Union Pacific had booght that road had more to do with the increased price than any connection or business arrangement at all. Bv the Chairman : Q. It was a sudden increase! — A. Yes, sir. By Mr. John F. Dillon : Q. You have stated, as I understand it, that the price fixed for on- listed securities are no safe or reliable guide as indicating actual trans* action. Is that so f — A. Where there are few transactions it is no safe and reliable guide. Where there are a great many transactions it might be. (J. So that it depends on circumstances whether it isor not!— A. As to whether bonds are active or not. Q. Aside from that, do you not know that there was a great advance in these securities between March, when you made your transactioDS} and the 1st of January, 1880 I—A. I think I have stated that I did know it, and was very sorry for it ; sorry I could not take advantage of it. Q. What, in your judgment, if you had kept your bonds, miglit yw have realized for them, judiciously disposed of, in the interim between March, 1879, and January, 1S80?— A. After I sold those bonds Ipar- "^me others. 1 sold the firsts as high as 90. I sold theaeooiMif K, I sold the stock as high as 55 and 60, CHARLES W. HAS8LER. 417 Q. In what year !— A. Daring the years 1879 ami 1880 ; 1880 prob- ably. Q. Not ^^ washed" sales; actual trausactioDs f — A. Not at all. Act- aal transactions, bnt Id very small aniounts. There was a bidding de- mand for the bonds at the time. Q. You have been asked whether a forcing of the whole issue of any secarity on the market would not have had a tendency to depreciate it That is so f — A. Yes, sir. Q. No judicious seller would do such a thing as that if he could avoid ifcf — A. Not generally, unless he had a great need of money. By the Chairman : Q. How did the Wall street transactions affect the prices f Yon have ated to Judge Dillon that the course pursued in Wall street bad more feet upon it than the railroad transactions. — A. 1 mean reports, bether true or false. As I stated then, there was a statement that e Union Pacific had bought the road, and the reports went so far as say that they were going to guarantee the interest. Q. Where were the reports coming from f — A. I never could trace rectly where they came from. Q. Wliat was the indication in Wall street at that time f — A. A great Muand for the bonds, with none offered, or with very few offered. Q. What were the indications as to the directions from which the re- >rt8 were coming? — A. Icouldnotfind anything. Iwasnotsutficiently itivcly engaged in the business at the time. 1 was engaged in various :i1r(Mul operations in the West at the time, and I did not trace these 'ports. By Commissioner Anderson : Q. Do you mean by reports, printed statements or mere talk f — A. alk. I think it was printed in some of the papers. I will not be posi- ive about that. By the Chairman : Q. Is that the method they use in what they call "pegging up" the lock f I would like to understand what that is. The Witness. The Wall street method, as I understand it? The Chairman. That is what I want. A. I have had some little experience in regard to the matter. The way is, to bid for things that are not to be found just at the time. You have them already, and they are locked uj>. You bid for them, or get somebody else to bid for them, till there are half a dozen bids; nobcKly offers; the price advances. Afterwards, when the price has gone up, the "lambs" come in and want a few, and will take them at for five or ten times what they could have bought them for befop*. That is the whole of it. Q. Was there any such transaction pursued in reference to the bonds in 1880 that wo have been discussingf — A. After these bonds were sold by the directors and others here, there w ere no bonds in the market for a good while. The next transactions took phice, as far as I know, some several months afterwards, and then there was a bidding for them sepa- rately. Different classes of bonds commenced to be bid for separately, and stock was bid for separatel.f. I endeavored to sell the thousand shares of stock before spoken of for $1,000 at the time 1 made the other transactions. I offered it to Mr. Gould through Mr. Bond for $1,000, pod ooald not do it. I took the $10,000 second-mortgage bonds for the 27 P p U. 8. PACIFIC RAILWAY COMMISSION. thousand shaix-s of stock, and I sold them about six mouUis aflcrwah at about ilfteen ceiUa ciitirnly sepnrate, Tlie Block snbecquuiuly bought in small Rinountf), anil made np one lot of 50 nliarrs, wliidi sold at 50. Tbe story vhh ciirreut tUat tliero was a great detnaml li Ibe Block. It went ii|> to 53, and tbeti a;;aiii nan dowu. 1 iind auntbi qnotittioQ a few moiitlis nftervrards at 22, and tlii-n again at 8. Tlii s then uo dcniaml for it. OOK AVD BONDS ISSttlSD BY SAINT JO.SEPU AND UASTINQS. By Commissioner Littlicu: KQ. What wuH tbo entire amount of stock iiiid bunds iiiisiicd on tj ■Ad from Saint .Iose|iIi to nastingsT — .\. Tbe nntborized uinoant ■pital was $10,0011,000. Q. I)i>e8 tliat inKUide. stock and bonds, botlif — A. ^o, sir. Q. Wliat w-oD itT — A. Tlio antborizcd amount of e-npital stock v •10,000,000, of wliicli «.t,(K»0.000 waa issued— I lliink lUat was it- tlio I'oorgiinization, tlio otlicr being reserved. Ttiu issuo of tUe Ilrtitii si'COud mortgage bondM on each division wus iiboiit 92,000,000 of t firnt iu etieli ease. I Imve forgotten tbe amouiit of the «eeond«. TIib were two aud a (juarler millions of laud scrip. Tlio amount is tMriat gtveu iu Poor's lluilroad ManuaHor 1878. I furiiiabcd the figures m self. Q, Assuming that this pro]>erty woh bunded and stocked for tvoi three limeti iU value in (be tlrst tnstauee, I wi»li you would explaju bo tbi- cDUiitruction of this little 2o miles from Hustings 1o Oraud lt!jiD would iu'tuiilly iTicreueo the vivlue of tbe bonds and sloek. Jud|tel)i Ion lias been trying to show that these 35 miles of road eonstniMwi Blh the Union Pacilic got control added largely to Ihe value of lliusecn ties of tbe main line. I want ytni to tell bow that was. — A. I cauK of one way in which it might bu dune. That was, if that liaefhM Saint Joseph to Grand Islaiul wii.i used for not merely tho bofliaei originating at Saint Joseph or at Iho other end, wishing to go back I Saint Joseph, or the lit tie business originating along the line of the rom but WHS used for through business. I romombor receiving a Saint J( seph paper which stated that Iho main line trains of the Union PaciS were lo run from Saint Joseph over that road. Q, In other words, if the UiLion raeiflcbad made some trHfllenrrnnj^ nietit, and had given to this road a constructive mileage, &c., tben' would have increased its earnings T — A. (Constructive mileage m sufBcient business. Q. Woulil these stocks and bonds have been affected tnanyother"ili by this link f — A. 1 do not see how they could. By Commissioner Andeu.son: Q, What roads from the east go to Saint Joseph I — A. There ia tt old Jlannilial and Saint Joseph, directly from the east; there wnsl] Saint Louis and Saint Joseph, reorganized as tbe Saint Joseph an Saint Louis, which I had bought in for the bondholders a few yeanb fore, which gave a littlo business — the tracks (^onneoti^g ; then Ihun tl north, connecting Saint Joseph with the north and south npnndilov the river, was tbe Council Blutfs, Saint Joseph and Kansas City. Q. Was there any large amount of through business seeking t] west, or coming from the west seeking Iho east, which, by reason of on vectious of Saint Joseph would have its natural tlon U> and fro m-erti CHARLES W. HASSLER. 419 lint Joseph roady and which would have been promoted and developed ' tho coustruction of this 25 miles of link! — A. In conmvetion with o Saint Joseph and Saint Loais Eailroad I looked into that subject lite extensively in order to control the trade for the Saint Joseph and lint Lonis railroads, and I found that the combination of railroads ^int Joseph were all against any such arrangements; that tho astern trade from Kansiis City would go over either the Saint Louis, Liiisas (Jity and Xorthcrn or Missouri Pacific, and be carried from Lint Joseph down by the Council Blufis road, or north by that same ad, or east by the Hannibal and Saint Joseph ; and, while we were [ very desirous of making arrangements to do that, it seemed to be possible to make any connections to bring the trade that way ; the Dibinations of the railroads were all against it. Q. Can you tell who the prominent brokers were whom you remem- I* as being the parties bidding for these securities at the room where py were sold, after your sale to Mr. Gould ! — A. At that time there LS DO place for dealing in miscellaneous securities; it was simply »tn broker's office to broker's office ; the brokers dealing in them were lin T. Hanna, or Hanna Brothers, I believe it Avas then. Q. Uo is still living, I believe? — A. Yes, sir; George T. Bonner & K I think wero trading in them; and Uaar tor Itaven & Co., and K)rge W. Dougherty, his firm name I have forgotten now; 1 think is here in the Stock Exchange now. Q. Dougherty is? — A. Yes, sir. [The Commission received a memorandum from Mr. Haar stating that IS bis impression that Rutten & Bonn were the parties who nego- kted the Saint Joseph Bridge bonds.] The Witness. If you will allow me to state, my recollection about it that it was Mr.de Neufville; he was interested in the Mont Clair ad in New Jersey, as 1 myself was; I have no reason for correcting y own statement as to him. By the Chairman : Q. Is there any other information that you can give us ? — A. Any- ing you wish that I have I will obtain for you. The Chairman. You have not said that you wanted to say any- ling. The Witness. No, sir; I do not want to say anything. The Chairman. You remember the point called for as to yonr ac- jimts of your transactions I The Witness. And the other information asked for; yes, sir. CUAKLEiS W. IIASSLEU. Ihe witness subsequently submitted the following papers : w/» of St. Jo, and Pacific^ Kan$a8 and yehraakuj and .SY. Jo. and fyestern R. H. Compa- hies' securitiea by Haasler 4' Co., to Jay Gould. Ig79. Delivered. Uocoived* Mirch 1. 110,000 St. J. & P. lets }10,000 25,000 K. & N. Ists. AccompaDyiDg were 4,m K. & N. 2d8. 4,500 K. & N. stock. 7,900 St. J. & W. stock. March 8. $50,000 St. J. & PVf. iHts ^20,000 Accompanying were 30,000 St. J. & W. stock. March 12. $40,800 St. J. & PVf . Ists $24,480 20,400 K. & ^. l8ta, , ft. new mUMMMT t cnuBucB V. njuiiui. ■' »— ' •->>' »— ^ Is! ii4< ItiiiiKaQ') f tfKlc of Kanvu, party of tlin iJrsl pari, Bod Ihc KiMU anil S'rliraaka I{»l*a)' (Jainp*D>' of Kanaa*, a vbriiorBtiuu orgBDizeil buU etiltinj iimlcr an'l I15 virtiM of llic Ib** of lite ^tate of KaoHwi, part} uf Lhu muiud pict. Whcrca* llin paMf of thn fint part wan iluly in corpora ted anil organixed lut tin Ciir|KiMinf oottatmctiDK, ownlim, maliiLBtDiug, aatl uperaling, and l>ccatuii tboawiicn y pareliannat amleoD forMliMnra iif mortgagoof a continnoiiHliuaof rallniidei titmllriK I''"'" ■> I'"!"' iipnn tin: wraiarly hank of tho Missoari River, iu ut Dcartlu town !•( KluiHiil. ii) liiii c^oiiriiy i,{ ItoDiphaD aud Stats uf Kuomu, to (he luvn Iif MurvKiill.', Ill till' i"iiiiry of M,<(«Iiiill and 8Uto of Kanau ; Aiii! « liiTiin 111 11 ji:ii fy of ih.' wi'ood part was daly iocoTporstcil and otgM for liiri piii|pii-ii 1. 1' i^o.iniii.i,;., „*r.iiiB. inaiDlaining, and oporating. and W,- thoi.vMnj. i.\ iJiii-ii...-- .ir „ -..I.- n„ li.f.ii.-Hir'-of mortgaKflof ■conutiaon«liim' railr.M'i ■ ■■ 1. -;■■._ 1..1.; ;i ^ , . ..j m r . - 1 rllr-. In llio oonnly of MarBlinll, in Ux Stikli .1 I. I . l^l■'iUuRntl^ua«triod of ninety-nine years from the first day of August, A. D. 187G. And this agreement further witnesseth, that the said parties of the first and second {larts have agreed upon, and by these presents do agree upon and prescribe, the fol- owing as the terms and conditions of such consolidation, which terms and condi- tions the said parties of the first and second parts mutually covenant, promise, and agree to preserve, keep, and perform, viz: AimcLB 1. The corporate name of the said cousolidated company shall be the St. Joseph and Western Kailroad Company. Artici^ 2. The number of directors of the said consolidated company shall be thirteen. Article 3. The names and places of residence of the directors and other officers of said oonsolidated company who shall be the iirst directors and officers thereof, and shall manage its affairs for the first year and until others are chosen iu their places, are as follows, to wit: Jos6 F. Navarro, of the city of New York; Robert W. Don- nell, of the city of New York ; H. H. Butterworth, of the city of New York ; Charles W. Haasler, of the city of New York ; William Bond, of the ci(y of New York ; Alfred Mitchell, of the city of New York; Louis Fitzgerald, of the city of New York; E. J. C. Atterbury, of Trenton, New Jersey ; F. W. Uuidokopcr, of Mead vi lie, Pennsyl- yania; Albe M. Saxtou, of St. Joseph, Missouri ; E. N. Morrill, of Hiawatha, Kau- tu; J. D. Brumbaugh, of Marysville, Kansas; Edwin Knowles, of Seneca, Kansas. Articlb 4. The amount of capital stock of the said consolidated company shall be ten millions of dollars, consisting of one hundred thousaud shares of one hundred lollara each. Article 5. The capital stock of each of the said railroad companies shall, upou lorrender of the certificate or other evidence thereof, be convertible into the capital tock of the said consolidated company, share for share, aud none of said capital tock shall be issued except as herein provided for unless by votes of the holders of i majority of the stock out'standing. Article O. The first regular annual meeting of the stockholders of said consoli- lated company for the purpose of electing directors of said company for the yeai heo next ensuing shall be hold on the second Thursday of June, lS7ti. Special meetings may be called at any time by a majority of the board of directors. Article 7. From and after the consummation aud liliug of a copy of this agrce- oent in the office of the secretary of state of the State of Kansas, all and singular, he rights, privileges, aud frauchisesof each of said corporations, parties hereto, their tevoral capital stocks, and all property, real, personal, aud mixed, and all assets, and ill debts due on whatever accounts, as well asof stock subscriptions, aud other things n action belonging to each and every of said corporations, parties hereto, shall be lonsolidated, merged, and amalgamated, and shall be taken, and deemed transferred, md are hereby conveyed to and vested in the corporation hereby established without 'orther act or deed, aud all property, rights of way, ana alh and every other interest ihall be as effectually the property of this new corporation as they were of the former corporations parties to these presents. And all rights of creditors and all liens npon the property created by either of said corporations shall be preserved unimpaired not withstandiu-^ said merger audconsoli- lation, and all debts, liabilities, and duties of either of said corporations so merged shall thenceforth attach to this said new corporation, aud be enforced against it to the same extent, and in the same manner as if said debts, liabilities, and duties had been incnrred or contracted by it. In testimony whereof the directors of the several corporations, parties hereto, have eanaed these presents to be signed in the names thereof by their respective presidents, and their several corporate seals to be affi xed hereto the day and year first herein written. { TiOinC BULWAT KC«aBM »3m Si •r tW H. J«««pli and PjclSr bH- mJ Dm««r ciiy R-" — ' »ihrU to Ortait alMnil s ■)&. »yr»i'Ml i^ Til iiuMB III toa^i ■>f •' r. r.>'j ,' ■ Kf* i 1 1*. i>« I Mi avc sT tW CT»^" ' .'. *.'-^ ■■-*'. ( xl,;i.[. 'iti liiil aernnnt, nrctsMTilj -V- 7j- » •.11. •i^-.-*^'. •••. '.:j'. »iir>;ir«-T' '■! Ihat Ihni.! inlirnW -.L--,.-. v.- .•.---«■. v.- ■. (.-.-. ■Ji-j,iTi.-'.riX\oa of thv land Jepirt- . V ■.-. —.• :i .r-,;: '.■.;.■ r.i- -. r/!rt-\>':k::!i!i !r * I,- :. ; r . 'w j7._Lr^l •iid WcMfm Division bonil- l«l>*b«>r£tML So'lk iiiv.ni-n. T'.-_.i: '>^ unral (Tj'inRli nndor the cirinim- -«• lumMvl. Biil i* sTi!. k i.^:-'ir. :■-;. ■ f'.r ■).'■ In-*! iiil^rcMM of tlie petKiii uOderlhcnmrrMiizaii^oib* l»-,.-,j..: 0' ■■: i :, . •■:.:. .;a: «l'«l of tlio two iliviBioni l» •»!'*«■« : ■^ni— FiTi4-nM>T1g»Cf iwij-'K *!.!'■;<,">'■; w-wn/d-m-iri gaffe bonds, »l,900,l»0i '. HASSLE*.! logth of e»ph of the old illviatoiis is aimxit 113 milcA, %aA, as you a . Ubt nod capital is aboot the Mme Tor eai^Ii. Tbe laixl, you trill romemlwr, la \ DonncetMl nith tlin rawt, or covoreit by it« new ninrisagi!n nbnvu naitinfl. >n, tbo fltBtenient tUab tho Eoetern Diviaion ncttoil abniit i30,itao during a il the Wcsii^ni lost ul>ont the same during tbe snmo period, thi' propi^r uno i i iMtM calciiUtidnH for tho fnturo T t not. TIip bu^tlncssoftho Eut«rn Divisioa origiMliiigoa its Una woiild not { ensM, and nny attempt to operate that line indfppndoat ot, and witbniu huv- niMliiMa originating on tho Western Diviaioa pusaurnr it, vrould r>>tnU in MMl. Anexomiuatinn of the tables showing the points nt which tho busl- ine lino ori^inattHt has cimviocnil me of this. • UlaMMkif tho now atoetiholderaof the Eastern Diviainn will assets ibem- • mAa np anjr dodeienoy, however small It might be. Yoii will ngreo with J bondholdors of eooh division have liud siiffloiunt aa»eMmimmi'ntsnbaid}rof81,60U,000, andissneditsowii bnndx t( ivcre sold to investors. And now that the " Excurainn," ic ' ^indreverendgentlemenandtheirwiveB took part.and aflet 1 iispowd of, Is foi^otteu, the assessment of ten per venr ':i'iiilerBiB ireah in mind. . iJ' ending at Haryavillo. boa not tbos!tiQechaa(!ea of 81 . ._ . 'f Peak, fur tbe tatter baa a land grant from the UaiiiHl J i'lltinn to the subsidy in Currfiicy SixM. I iif tho company to build further westward, in orilerlc .i.i-nlo onr Western Division. Ifthisooaldbedfine by simply I , toMurvsvilli', tlist company would most gladly bnildih.ii 1 . . .., . ^, .. ,. , .^1^ ^ fueder to their unprollrable lin ' I I roftd connects nilb our Western Divis- I hoe to Chioago isnnder tbe couirol of | ; and that company can nffonl ti 424 V. 8 PACIFIC BAILVIT COMUISSIOK. Wben tbe nav dtnoUon, wipa— dtng Ur, Taoaer. took pos teBbor, W33, the tucM fi>r tlia mn ItlTI and 1871 had not beeu pai . thai bMoni* neoe— ly to prams fcr th« imBodbM iMjiDent of anch a. pVMring, tbe sew ditaston^ being Uige bondhtddetBi odTaDced tko mODe; necMurj nv tiiw poipoae, with tba nndentaiiding that tbej sbuuld be ropsid frum the pracerii of thewlaof ttieraed, wad tibeae amoante ao loaned have all be(>n repaiil b; tfafput' ohaeing oomihitlae. Bi^mNita of taxeohaT* alio been made from tbe oiirrttot receipts or tlie roiut, lottn amount of about $34,000 during the year 1816, and th? purcliaBing committee htva abo paid laigo eama raeelTed ftom the boodholdera hi odilititin to tbe amoiiata n- fbnded abOTo rofenod to. It haa been impoarible, hofrever, to meet all demauits in fall, and wbea the two BOW eompMlM, whleh had become ownen of the propertj, by trsoefer from Uks pw- ehadng oomniittea wen fhlly oixaniied, the pMaldoQt won roqnest«id to make *n a- amlnauoB of the matter and report to the Doard of directors Much raeBsurea mIh might deem expedient fin adoption. After a oatefhl examination of the property, of ita condition aod itsaeoewiliearui tbe near ftitore, and of all the olalma agalaat It, it was attcertained that tbe anin ot •~>~u> » Lii.- J 3_ r^i u jijg forniof Western Diviaion, isu aod I'or necessarj- latmulutv tbe near ftitore, and of all the olalma agalaat It, it 96(k000 waa naeeagaij to meet the demaodi ibr taze>s and tiw snm of 976)000 waa tequlted fin the eame pnr npaiio on the former Eaatem Dlviaion. iinunbewelltonoUeehorotbattbeplaaaof reorgaiiisatioQ, adopted b; tbe fomci bondhiaderi, wen prepared during 1074, when it wna thougbt tbal the forectoann would be apeedily bnm^t to aoonoliuion, and wbeu il waa ex|ieoted thai tbe« Ina of the road would ao gTttatly looraaea that tliu cnrreiit ttutua o6utd re»dd; bt paid from that eonrce. Theae plana of raocganisatloD provided, boweror, fur tbe ieaao of aacb Ivgu mdmdU of &r«t and eeeond HibrrteMe bonda In oxMunm for ihe former aeounties, tbM.Tbtn the boenl of dlneton of tn* two new eompaniea axamiued tbe aj&tt«r it w»t fijaod tba,t it wa« abaidatoly Impomlble to islae any money for aojr purpoae, wtiatercr, hj the iMoa of any aeenrlty whloh ooold now ha aothonaed by tbem, for no laleii mhIiI be made at any price of third-mortgage bonda Mtd, maeb less, of auy Dot« or niur- onred obligation of the newoompantOL mieatatameatof earalugs, appended lier>I«, ■hows a well Biutained Inoreaaelrom month tomontb, aad argues very well for llii' immediate fkitnra of the property, and had not tbe geaeral eiogDntioo in buiim aflliira which has existed in ail pwtaof theoonntiy been aggravated by tbefsrue* of graaahoppetB, the iucreoae wonid, donbtlees, be more mnrkod. Uut uvrn wltb tbli improvement it wsa foand that aoine immediate Bc:tian was oecsHsary to provide iJu $135,000 required as above, aad as the United StM«a circuit court hod Qot jrt n~ leased ita control of tbo pruperty— which indeed it could not do, ucuordin;,' toilsnwn order, iiuril Ibetuxeaarepaid — ittriui,af)erinatai«ilL'libQr»tioii.docideil that tbe prcii- deut nftbe twonew companies, andHtillreceivernnder tbeorderof tbecaan,il>a payment of interest or principal, any bolder may apply to coart for an order dint'' log the sale of so much of tbe property as may be nec<«4ary to pay them, aod tttt. without suit, Bui;b order will be made. At a recent incetinf; of the boiinl of directors of the new, consolidated corpoiatiMi'' tbe St. Joseph aud West«tu liailrond Company — the undersigned were ^pointed * committee lo bring tliia matter to tho attention of former bondholders (moetlui^'r interested in the property), and biivinj; made the above statement of facta, wodW''' simply to add that it in only lliu ikUsnlnlo nerewitiea of tbe property whiohtu" caused the bonrd's apurova! ni" the isaiio of these c"rtilicates, but that in visw ot •'' tbe cirenmstaucfs of tbo casn, iiud tlie citremo probability that any oall (or a cut •»■ •essment ou tbo bondbolilerj noiild meet with but few responss!!, we woold nrge ajf yon tbe propriety of your subscribing for as largo a aum an [Kisaiblo, and this f *° with the couhdence that it Is scarcely possible for a more safe investment te 1* foond, in view of the fact that tbe nbole line of road of SSfl miles in length is btW" at their payment, should thej not be paid from the earolnga of the property- CHARLES W. HASSLER. 425 Tour Immediate attention is requested to this matter, as many of the claims are very pmdng, «nd the United States court may make some other order in the case which giuy be even leas agreeable to as. Sabaeriptions may be forwarded by certified chock to either of the undersigned, who •«riU return the certificates as may be requested. Respectfully, R. W. DONNELL, Donnelly Laicaon tf Co. ^ 92 Broadway ^ New York. CHARLES W. HASSLER, Uassler ose shall be kept sejiarato from the other funds of tho operating de- psrtment. The said certificates to be issned only as occasion reciuires. and to be numbered con- neatively from one to sixty, and for that ])urposo tho certilicates issued by virtue of tUa order are made a first lien upon all the property of every nature and description now in the hands of the receiver, including road-bed, track, and rolling-stock, from Mjmville, Kansas, to Hastings, Nebraska, and heretofore known as the Western Divuion of the Saint Joseph Si Denver City liailroad Company, and the earninss of the laid Western Division, after deductinj^ operating expenses, lloatiug debt, and the •xpenaea of the receivership, are pledged ^r the payment of tho principal and interest of this obligation, according to the tenor thereof. No. — — , Receiver of the Saint Joseph j- Denver City Railroad, HENRY VlLLARD. 427 nmy- itt. Bfl ||pMt ..• stnber liber... mnber. MDber. Ewniingsfrom July 1, 1375, to April 1, 1877. Months. 1875. $30, 181 04 40. 510 83 50, 550 05 53, 164 58 48,467 47 41,304 90 1876. $26,«23 44 28, 195 81 23,967 80 24. 251 6'J 32. 043 55 35, 210 82 28. 938 42 43, 962 89 61, 390 87 55,928 66 51, 2.)6 15 38, 998 10 1877. $28.280 04 31,717 73 31.517 22 29.391 12 New York, Saturday, May 14, 1887. HENRY" VlLLARD, being duly sworn and examined, testified aa Hows: By Commissioner Anderson : RECEIVER OF KANSAS PACIFIC. Question. You are named, 1 believe, together with J\Ir. Greelo^^, as the weivei'S of the Kansas Pacific ? — Answer. Yes, sir. Q. Do you remember the date of your appointment! — A. I believe was in January, 1878. Mr. Holmes. You were appointed receiver November 4, 187G. The Witness. I am getting old, and liave forgotten. Mr. Holmes as my counsel at the time, and so I look to him. Q. How long did you and Mr. Greeley remain such receivers f— A. ntil we were discharged by Judge Miller; by order of Judge Miller, : tie Supreme Court. Mr. Holmes. I think it must have been the latter x>art of 1878 or the rstpartof 1879, because it was during the Christmas recess that we 'gned the motion. The Witness. We were discharged by order of Judge Miller. Q. Late in 1878 1— A. Late in 1878. Q. How familiar did you become with that road during those two or uree years? — A. Very well. 1 had my office here in New York, but I ent out regularly. Q. How often did you go over the road f — A. Four or iive times a »r. I spent considerable time at Kansas City and at Denver. Q. Have you complete reports or copies of your reports as receiver I your office! — A. No ; I think not. Q. Where can they be seen ? — A. 1 iiould not tell. They were ren- sred to the United States c(urt. Q. Ts there a complete copy in the oificeof tlie Union Pacific to-day! — .. There was one in the office of the Kansas Pacific. Mr. Hollies. Yes; I think they will be found at the Omaha office of le Union Pacific. The Witness. Yon see, we reported to the court and not to the com- any. Q. Please tell us generally what was the financial condition of that wd during the year 187G and 1877.— A. It made defiiult. Q. Id all of its securities ! — ^A. On all of its first-mortgage bouds^ ot which 1 n-prewiited tliflLTODt clwt»m r>r lidil«-nt, ami aa wbuM r ernUtirr I w»n n>ally apiKiiiitetl rw^htT liy lb« i:onrt. Q. How loag iiwl iliostr AeciifitkH n.'ai:u» in drf^iilt t — A. Ttwji t Baineil in dcr»uU until Ii4T1f; -lunr. ISTll. Q, rniiIjt»awrt<'iii.'«-b.ir>;«li»rji>drr¥c«.'iriT'.'i« ]iro|Ml| AS TO rOOUaO ACBF^atK^T. ;. Vac mC Ik awl praoinMil sf.t< Ihai wiu lakeD iu that ^ ■•kadlae By l» Ifcc nlliile atljintfipgiitT a poolmtr agrpemtnt t li»mTlvs*aMBber,liaafMtot at least, of thu hoUTonofilig rfciM mA iMr Itum tocHlwr at iwmnlaeei! a;n'eed apon, c h f—Bnipiw— t jroo, in eomtK'gtioo witli Mr, llolmui _. — -bt«««e»e»)aiiiritti* to bold t bo ii«ciirttiei I }«■ with (bat pooting a;nvetneiit T— .1. t «r tk* int^HtfgPse cmliton 1 wax made one irfi ~ ' I tftaKe of eatTTiDg otit a jil; r !■ canjriog oat UiIa I < I lianl aa penoiui ■M «f iafiinn»l(oo ftn- Ibvoi. 1 _. g caaU be dooe eootmo- to ibe plaoi I •■ wftbaaC ■;' kavvM^ and. tbmagb mp, tli i iaCtrcct in ibt- |>o»i. ■ )>[il down as Kpreaimtu ! tf Ikv Eammr»rG'' (.■..:„],.,„%-. ilu.f u ^ pwivaMa.iBa«B*faMHaiBHK. x»- «•««•• Mb. 1 Ai bM aicK. a* ;«■ vfl fie- ■■trtei|iMiwfc [fim»ti^t dhr laaAillaK. I «^ offi-i^ a f«rtlci|atioi \ •• --X taawMf ttttMtfcrlfciWfiMt; bs: I iiafi no tioldlnfsin! :; bs: I iiafi no tioldln^sin is (br rrttkincnt I A. To . f«B eas rdcr tu to auy pnMJ ft«f tht. iK»l, and of Uie " HENRY VILLABD. 429 ons that came to it, the changes that came to it, so that we can obtain cm sach person an exphinatiou of what the interests of the partici- »Dts in the pool may have been, and what the changes in those inter- nts were, and what each person realized from that pool ? — A. I onght iliave been able at the time, but I could not give the information now. Q. Kobody, to your knowledge, kept an account, in the shape of a B8h account, of the interest represented by the pool f — A. This com- littee, of which I was one, for a time — and 1 will explain directly what mean when I say for a time — did receive these securities. I do not niow whether during my membership of the committee all the securi- ies here mentioned were received, but a very large proportion certainly if all the securities placed in the pool were received during my member- ibip. I did not keep the accounts of the pool, but, owing to a difficulty rhich arose (I do not know at what period of my membership) I resigned hHD it I had at oue time sole control or sole custody of all those se- lorities. I bad the keys to a box in the Stock Exchange vault contain- ng them, but 1 did surrender the control and I may have confoun<:led he sarrender of the control of the keys to that box, which gave my practical control or custody of all those securities, with my retirement torn the committee. Commissioner Anderson. The general difficulty, before that pooling igreement was made, then, as I understand it, was that the various oterests representing securities belonging to this road, which were in lefiuilt, were contending among each other, and there was a rivalry to ibtain better terms for one set of securities as against the other ; and, kfter negotiations which led to some personal adjustment, some would nanifest dissatisfaction, so that the pool arrangement was resorted to D oitier to arrive at a detiifite conclusion by which those interests would lecome fixed. The Witness. There was a struggle between the first mortgagees, and rhatmay be termed the junior securities. The junior securities en- eavored to get a settlementwith the first-mortgage bondholders, which ronld improve their respective positions, naturally 5 and, as you see, licre was a contest, so to speak, over this point, what side to the con- »^ would make the most concession for the benefit of the other; and. Daily, in order to tie up the junior securities — the stocks and the in- ome bonds and land-grant bonds and funding mortgage bonds, &c. — bis pool was fojmed. Q. Was not the essential feature of that pool that the junior securi- iee, including the youngest of those securities, which was the stock, lioold be sciiled at a fair price, representing, as near as you could get (it, what their fair relative values were, so as to reduce the gross moont of outstanding incumbrances, interest, and stock which hung rer this road t— A. That was my understanding of the original object rthe pool, that there was to be a reduction in the volume, in the nom- lal amount of the junior securities. Q. Was not the elfect of the consolidation, as carried out in 1880, Irectly the reverse, in the respect that it increased the volume of out- :anding bonded indebtedness and the volume of the outstanding stock, Dth as to the Kansas Pacific and the Denver Pacific! — A Practically lat seemed to have been the ettect. I do not remember the exact fig- res of increase. Q. To go back to this pool, Mr. Ham has informed us that the cash aloe of each person's holding was carried out by a reduction into Kmey at the rates agreed upon, and that certificates to the parties in- siested in the pool were issued and delivered, and the^t tUat is all Uia r evil l8l V. S. PACIFIC RAi: cvideuco tber« is of tbe reJalivo ititvmttK of vjich lioltlcr in tUat p«l Is th»t tbe way you iimlerstand it I — A. TUat i» my ircoWeetkm «t H Q. We have hIko been loM Ibiit rroni fimt- to timv tliu nicmbcnil that iKwl would iiicreAse tUi-ir lioMiii}|;8 by biinKing i» frwth Hecoribq Is that also your recollcelioii I — A. Yo«, sir ; lln?y hiuj u riglit todo tbal As far ua I remember tberv was no rL-xtrivdou ujioii iiiiy lioldcrs ol curitips HS to tbo uitiotiuts depusiled. Q. llov was tbut {lossiblo t Tor iDstiiiict-. ttic i>o<»l wuh fununlii April, 1HT8, Hi]ool, if nuderthe pool, he cunld oblaiu uothiuttbtt tbo uortifleuteei at (he Agreed price in Aiiril, IHIH, although the inaAi price had cone np above that jirice. how euuM heiacreasobis iutereati tb« pool by the purchase of such bonds f — A. There was, i reinembu,! great rise in Ivausus I'acilie securities ut a giveu niotneut. I lliiukl was early iu 187!). My recolleutiou is that from the time nbeii lb market prieeof these juuior secttrities exceeded the prlcoaL irhiclil^ could be put into the pool, the depositing of securities t^^oseil. Mr. tloLMEfi. Xherovrasaootherexplauation. Persons liketheSall Louis parties, and their associates itud IViends, niihout an exeeptluVt thiuk. held uo oue class of securities, but ht-ltl fniidiug mort^agti' ' which was tloating debt, or held unstamiH-d iutsomo boudis or laud grant bouds; and, although the prii:« might have been a lilt more than the \wo\ price, they couhl not get any prie^ at all fur lii utbei's. Uu the whole they concluded that these three cIiuse«o(il curities which they held nere liettcr in the pool lor theui ; sutbt^tq them in. The H'lTNKSij. I think E can suggest another r«a»uu. Ur. Gnl bought out the Saint Louis partfeif, |>ayiiig them tDoncy fur their h\a est in the pool, and that wonid i-etluce the number of gwrtiia) in >b pool to very fen-. Commissioner AKDKKiiON. St III, that would nut furnish any ei] tiou for a person buying bonds at n higher pri< i- fli:iii th\- poseof coaipelltug the > ttt a higher value, and they did succeed. 1 atauee. They were recognized at par, wens tiny u^ Couimissiouer Andeusok. Vour explanation that lUey cenwA In alter the price got aliuve (he {>ool price, is all right. Ibe WiTSESM. That is mv distiuL-t rvwIfecUou. HENBT VILLARD. 431 Q. Do yon kuow the figures of that purchase by Mr. Gould of the int Louis parties! —A. At the same figures that they went into the o\y 12^ for the stock. Q. Do you know that ? — A. I think so. I am very sure I am right my recollection. Ue may have given them a bonus for some of the earities, but I remember very well how dissatisfied those people were ter these securities commenced to rise in the market, within a few fteks after they got their money. Q. They felt the same .way Mr. Ilassler did! — A. Whenever I meet lem they still talk about that. Q. lu regard to the taking out of the Kansas stock iVom that pool, ow was that done t — ^A. There was an article in the constitution of the ool under which seven-tenths of the ownership could direct the execu- i?e committee to do whatever they saw fit in disposing of the securities; nd my recollection is that in pursuance of that authority, direction ras given at one stage of the pool's existence — I do not remember at tat exact time — to take out the whole of the Kansas Pacific stock. Q. You mean by " taking out," to sell it to some one person ! — A. 0, it was returned to those who were entitled to it. Q. Are those the same persons whose names appear as having stock 1 the list before you ! — A. As far as I remember, it would, excepting I the Saint liouls parties, who are Mr. Usher, Mr. Edgerton, Mr. dwis, Mr. Meier, Mr. Oarr, Mr. Perry, and Mr. Greeley ; a majority of lem. Q. Was that done after Mr. Gould had bought them out ! — A. Yes, r; certainly. Q. Who does that leave as to whom the stock was delivered ! — A. ly Gould, Frederick L. Ames, Sidney pillon. Those three; that is bout all; and myself nominally ; I had none. Q. You got no stock t — A. No, I never had any. I uevev put any in, Qd never got any out, consequently. I do not remember how I happen ) be down there. Q The result, as I understand it, is this: That Mr. Gould, Mr. Ames, nd Mr. Dillon — is Mr. Sage's name there! — A. No. Q. (Continuing.) Mr. Gould, Mr. Ames, and Mr. Dillon bought out the iniDt Louis party, as to all their holdings? — A. Yes, sir; it was Mr. loald alone, as far as my recollection goes. Ho bought out the Saint iOnis [>arties. Commissioner Anderson. And alter 3Ir. Gould had bought out the laint Louis parties, that under the four-sevenths provision, all of the amaining stock of the Kansas Pacific was taken out of the pool at tbe rice of 12J cents, named in the pool, and delivered to Mr. Gould, Mr. .mes, and Mr. Dillon. . The Witness. That is my recollection of it. Q. Do you know at what time that took place? — A. I do not; I can- >t give the time; I might find it; I really do not know. Q. Bow long after the Saint Louis parties were bought out, or was a part of that transaction, that occurred early in 1879 f — A. I do not now; I do not remember the time. Q. Do you know how much stock it was that was taken out of the >olf Was it more than appears on the face of the paper before yout -A. There is no stock down to Mr. Gould there, at all. The stock of le £[ansas Pacific was 200,000 shares. Mr. HoLUES. Yes ; half stock. Mr. Anderson. There was 200,000 shares^ representing $10,000,00Q, 432 U. S. PACIFIC RAILWAY COMMISSION. The Witness. I^Iy recollectiou is thateventnally about three-fourths of all that 8tock, but I am not «ure. Mr. Holmes. 1 do not recall it. OoinroisHiouer Littler. Three-fourths of the stock was what! The Witness. I am not positive, but my recollection is that thne- fourths of all the stock was in the pool and taken oat. I mean all of the outstanding Kansas Pacific stock. By Commissioner Anderson : Q. It was all ontstanding, except about 6,000 shares, was it nott— A. All bat aboat G,000 shares ; yes, sir. Bat this is not a positive recol- lection. Q. What you do know is that the stock which is stated in tbaH agreement as being in the pool was taken out and any other stock, if there was any, had been subsequently put in, which does not appear on that paper ? — A. It was all taken oat ; whatever was in the pool Q. And at 12 J cents! — A. Twelve and a half cents. Q. At the pool price? — A. Yes, sir; at the pool price. VALUE OF KANSAS PACLb^IO AND DENYER PACIFIC. Q. Will you please tell us generally what your estimate was of this Kansas Pacific and Denver Pacific road, as to the business it did dur- ing the time you were receiver, and its operating expenses and the nature of its advantages, and your own fair judgment of the value of that road I — A. My recollection is that the gross earnings of the entire Kan- sas Pacific system during our receivership did not average more than $3,000,000 gross yearly. It may have been a little over that. I do not remember. I think the highest earnings we reached were $3,200,000. But I am not sure. 1 will undertake, however, to procure the exact figures. You see it is eleven years ago. Q. We can get the exa(*t figures. Wm want to know your judgineiit of tiio condition of that road. — A. My recollection is tliat wlien we as- sumed charge of the road it was in a wretched condition. It was utterly out of repair. No n)oney had been spent on it. I recollect that (lis tinctly, because Mr. (3arr, who was then i)resident of the road, caraeto Europe, when I was in Frankfort-on the Main, and made a speech tn the bondholders, whom lie called together there, and told them lliut was the reason they could not go on paying the interest, and some earnings of the road would h.ive to be put into the road for repairs ami renewal, or they would soon be obliged to stoj) operating altogether. My recollection is, farther, that the neceijsity of using the net ejiriiinps of the road for rei)airs or renewals w^as so great that nothing was avail- able towards the payment of its iixed charges, except the interest on the ,hine and ])ecember and February and August bonds; that is. the first mortgage bonds against the subsidized portion of the line, 4(H> miles. Q. Three hundred and ninety-four miles f — A. Yes, sir; we did appb to the court for permission to pay interest on account of unpaid buck coupons. But that is all the road would yield at best — the interest on these two mortgages. There was the Denver extension mortgage, amounting to over §0,000,000, and the interest on the 1 and- gran t bomli^ could not be paid. 1 n fi\ct, the road earned about half of its Iixed charge^' Q. Please continue your picture during the term of your receivership and state what imi)rovement, if any, came about. — A. We did appb* for leave of the court to use apattot Wi^ ^a\:iiin^s in relaying tracks UENBY VILLARD. ill Steel rails. Wo iv|))ilie«t fur Iwivo Ui buy smnw ntlliiii^ Ntw^k, eape- illy freight cars, und to reiiow Hornu bridgw, I ivini-iiilier. But tlie itilitjoii of the iii-opftity was so clist^ouraRinK in thi- liim of the euruings. Ihe receivers showetl iu their reporttt to the court, that even the first rrtgnge boDfltt ou the subtiidized )iortiou of thti roiul went hdowSl) at Ct lime iu this market, and tho 7 tier ci'ut. Deuver extension botidii nt below 30. By Cou)ud»tiiountitiaiti|rdowD up tolSTOt — A. Yes, sir; after we had obtaitieil rniasioii of the court to pay intercMt un the llrst mortgages on the b»(lii!ed ix>rtlon of the line, of course thu Ltenda comiueuced rising. It ut the time the setlli^tneut wii« made — I believe 1 am right- " isvcr exteuKiou IwndH were still GO. ^Ir. Holmes. That was in 1878. The Witness. Yea ; it was au utterly forlorn niilroad properly »t; le wo took charge nf it. By OonimisBiouer Anderson : Q. How fair were the symptoms (if iniproveniunt at the liuie. you left' , My rccollectiou is that there wjts uo improvem^t in the earnrnj^l u struck tho years of drought in Kansas, too. We all remember the ne, gentlemen, wheu there was three years of distress, and tlie whole untry contributed to the relief of Kansas. Wo strnck that time, and course with these natural causes against ns it was impossible to de- lop or to get better results from tho property while the crops failed ar after year. Q. Do yon recall the fact that while you were a receiver there was a Tn'utcnt diflicuity during the first year in regard to obtaining terms r through business in connection with tho Union Pacific! — A. Yes, •; I remombi'r it very distinctly, becauso we receivers worked vc4y id at that very problem, of securing recognition of what we undi kmI to be tho rights of the Kunsas Pacific, as against the Union * \c, noder the acts of Congress. Lj. How far did you consider that success in that direction w< wlioi-ate the condition of your road T — A. Our belief always was th) Ihe Kansas Pacific could obtain a share of the through business over 1 Doiou Paeiflc. to Utah and Nevada and Ualifornia it would at once die the Kansas Pacific a good pro|wrty. Wo did our best, tJirough Eotiations with the Union Pacific people and through effort* in Wasli- [ton before Congress, to secure the special legislation that wa» th» It'Hsor comitauies the earning) that ajipcareil to be derived from their Hoctioiix of the roada, and has- iiig tbti mauagemeiit iu the wliolu control of tlie one leHseo compan}' !^ A. I never looked into the tjueRtion which method would moat Rpeedily iii»iir« the aticomplirthmeut of that object ; bat I do remember verytlJA. tiuctly that tho project of a leaito of the Kauaafi Pacific to the IJnian PaciRo Wiia coiisidored reiioatedly. It was a project of a lease, witli' guarantee of the iiitoreNt or of fixed charges ou the Kausan PaciQo debtwIncKs, Q. If theloMHeo company, the company taking tho road, shonld simulj obligate it to nccount to the other company for its actual earnings, ^r deducting operating expeuMi, would not that havo obviated the allfgoj injustice of undertaking to pay dividends on the total amounts of Jti sttick, no matter how great, and intenutt on itii bonds, and putting lliat burden on the coiiHolidated company T — A.. It has seemeerii- Uoi) uud vnriiin^s of the Kaimas Pactli» after the mkldle of 187ST — A. 1 cannot slate positively whether there w:ui or not. Q. Was there not ii hirgu ioerease in the »alea of tiieir land (,'rautH ? — A. Ill their lauds, there was. Q. Was there not a \'cry rapid increase in the public market value of Ihe various secnrities of the Kansas Pacific, culminating, perhaiis, in 18791 — A. There was, as I have already explained in my testimony. Q. What I wish to get at in this : Was there not, iu ^neral, a great growth of the earning capacity and basiness of the Kansas Pacific, be- tween yonr taking charge of the road as receiver and the termination Df the foreelosnro suit in IST'J t — A. I do not think there was a gi-eiit l^wth during our receivership; but subsequent to the receivership tiieie was a general revival of railroad earuiugs, beginning with the winter of 187S-'79. The resumption of specie payments exercised a Btimulating effect upon every sort of property. Q. iliul or bad uot tho depreciation which existed in the first two Bears of your receivership very much disappeared in 1S7!I! — A. No onbt. Q. If you remember, was nut the consolidated mortgage of the Kan- sas Pacific the result of the plan and agreement and serilement result- ing in tho decree of the court dismissing the receivers, aud turning back the property into the hands of the company f Was not that consolidated mortgage one of the features which led up to the adjustment and pay- iBient of back interest and the general reorganization of the roaan thu Uirinu PmeUe 1 Have you iitt l>e«ii tii nttlnxvl tmtters utnl liiwl al^ren experivaeel — A. I b«rr. He HOURIL He uivaint be ban not «x:uti)uwl lb« Bgttrc«. Tb« WcnsiB. But 1 have uot exaoiiu«>) tl>« (lieanH. Or cuam lit teraU—tioa of Uui cooip^UUwi botw«rii tlie lirp lloi>« wasnn uletuvnt oTMRBglktoboUi. (^ If j«a knew all the foctii iti Muttoti (i> bucli ciniimnius, would ym "~ " " iHMbly v>tt)|»et«ot to iln-tomiltio tliu rutnlt flowluj Bt — A. Cerlaliily. Tako tlie l>un\'ur lnuine«, r distiDotly rviires«iitH UK^y a:> (wr von(. of nil tbs 1 eatnlii]^ wlmn I took i^barp^ us rvcolrer. Tha _ Ikmoonpoly of thatbu8liw»» (luill Niu Uiiiuu PaoiUa baarih«OilaniBCratnirr>niiCti<>v-iiii---->A'ii l[ i.ti.- '<» ;ill lUi^ <:Hlur..lo I. wMA Kdll ■atflaiMV coativlitor a[i|»mrr>L- Kkimim PkcIBv moA Vaiov VnciAv Raxlituy CompiDlKW t^t ite two luaiU (kkl) bo opcnttxl a* ■ isKiiiiiauas lioo, ktiiI hi nil runjioctii m wn- ^Mpbted bf tbe aevi-nJ arU nf Cougrcvin ti-latioo Utcnitu, unil lu onlcr lint lln I^MtMM of tha public aod tbe Oovenimml luay Iw li<;tt uaroings of tliu ruul, ot «s« the <*uU ill vivvr fur tUc purpoHC of iKioniiiig tliv stock, m ttutt Hi (lool miebt make a rixo ou tbe euiLritnt(>e of intvrvst T — A. 1 tlo not ne- iJU'*-'* •'*** "'otivs of tlie n-al promoters of tUc poo) to tliat txU»i. i» not on« of them. Von fiigueer, cortainlyt but f iu a repivwutJitlvc C8[»acity »ml not as a party in interwit. pjd you (li>lil>erate upon that r|uefllloii nt all vitli Ibemf— A.I M iloobt 1 tlltl nt tbu lime. fiM do t><^i reoollt^ct T — A. t ilo not reoolk'ct it ; no. (^oiutuisiMon then adjouruod to Tausduy, May 1 7, 1837, At 10 a. y. \o.i JOHX rONDIB. No. 10 Wall Stueeh', New York, Tueaday, May 17, l8S!ti The Commissiou met; pursitaut to Bdjoarumeut, all tbe Commissiona ing present. JOHN* PONDIU, boing duly sworn aixl examined, testified as follows: By Coiuiuisatouer Andkbson : QaustiOD. What is your occupation f — Anttwer. I am a broker. Q. How long have yon resided in New York Oityt — A. Twenty-t lars. Q. Have yon had any sjiecial connection with the affiiira of the tTnH liflo B^ilroad t — A, 1 tiod connection with the Union Pacific. witness' CONNRCTION with union PACIFIO. [n. Mr. George AslimnD. of Springftdd, Uass^ cotiie to my hoiuw uiul bruugUl iiiu tbo refxirt or Jerry Larocqav. It was against th« t'liion PivcificKnilruiul. Iliit opiu' ioQ VAs that tlic whole act of Congrv^s was illugal. By Mr. Joas P. Dillox: Q, Wbo gave Ikai opinion t — A. Jorrii' Iiarocciaft. OonunlttMmer AxuKKSoy. H« was a Democrat. Tbtt WmnEBS. Ho wan a fincerv nan. OoomissioMT A:iBKKSox. H.> wan my ounsiii. 1W Wmntss. \V*U. a raAti iievi-r livwl that wiw a iK'tter man. Se WHS eoBTioecil of it. I wt-ntovw toG«'oeral I>ix, wli«i) rlie n'portcnDit' lo iBC^ ami w« wt'ai lo I>uik-1 Lon) for Ihh opitiioii. lidnei-il I)ix, Ur. Ciaoa, aad Ky«fU mat to Mr. Lmd. Mr. tAtn) 8;iitl in OoiiotoI Dis : t wfll fiT* n« ■■ t*l»Mli*t Uftmham. I ilc n^l vnnl to >w Mr. L:tnHTiin»'iiuniD. H>: IMt«Mrito«*)lr.'n*r]^«rMM,orHr.T>ll<>til<>i>: l>nl. 1 «lt1iti» ytmtmimtafmitmH^fmmm^tbm»Mkit.ity»a will Imvk it te nin. Loan Of •l,ao■■■! * ^ TWOnwr— iM* aer^ «KM*"t tlM« to boaiU T— A. To$l<],IX>Os ■littk I ^rlli4 ]lr.Cka>faB B. BaacU «• bceone a director »nd to im mL H* wU W ftMl ■• wrtiriiy »'«• dK peopled iiium' to go into ndPMi WiMi^. Be In I ■* •UMM**— U>e mfnnil of tli« ciir- PHMjr •<»—•• W M ia M M. T>>tifc,ttwOoT»CTtweMt srrip- I went ovH to 0«WCvl Dix *«< uM Wa vkrt I fcad tioM. and Iii> wiu von* «kw4|ikHHw4««fen5SMmH. Tto TaiMPKiAeBHlnNuI liatUttUiit time9XtmjimMwm*i»fmmtakmaa»nviih. Dr. Unrani wasri^ |iwfcfaMi «f dw khL «M Jpata A. Dix «m piwideDt ; Cisco vu trvawMvr. aa4 OmvIm tterivvM amucaa* tiiMww. «). WWMwmytMl Wtw y JwKBar T— A. S«,Mr; I waa notb- i»jt>t th»p»— «yfcrlihMi»b«ad tbe nwd. «i. A«M1 •TiaNHtot **nwr»-«A. Tmlmt. GcMnlJoka A. DiZ atoll* • vftatMWM ttei ■-■ a* Im^ a* r«Mifir ■■ via tteto, Utrsr will fliM MMMMttokSOk'' tWaatafCMi^aM 1 1 |aiiiiiilthto> teJateh tUpmi' ta fcSC W» aavw ^Maatoi «ka« «lto HiHiMim ftaaaii. ti. WW •^yma^ ^vmaH * to «-.JI. Dt^ OaaML Itr. J-MTt P. mu.>Ut I totot yaitoai ^a fcnw toaf Ir- TWXrtyt»«> y»tt^IN»aa»»M^fcCtotfctCwA»1>abJter. Tbqr '~ " 1 aw tfeiM tWy tlU »»i vw|Btto «tr Jimitoa «■▼ toam. Ttagr ' ' ' ' ~ixviM«aa,a»dth«TbMigllit K«9to»BaM»«rJaAaB. ABv. " .JOHN PONDin. not ^ near tlicm. I bad notliing more to do witli them nutll tbi BT end of 1867, ou tbe 2d day January — no, tbo lat day of JaQuary. By GommissiotierANDEBSON: \. 1868!— A. InlSCT I whs iiivitwl to come to tbe Union Pacific liail 9 office by Mr. Tiittle, by Mr. Ciuoo, and by Mr. Charles Lombard pr were waiting to roi^ive me there, to see what Icoubl do for them «gard to Auanceei. I would tu)t go. I told them they had treated very shabbily, and that 1 did not want to have anything to do h tbem. Ciftco came iluwn bimKelf Ut see me with Dr. Dnraut. to my pe, and urged me to come as i|ittck aa I could to tbe Uuiori Paciflc Broad office. J went up there, and Ibey were in session. They told |£oing ujt that " Mr. Cidboun wouM not certify a check for $:37,OIK) tiiB Fourth National Bank, ami that Winy had to pay the cou|K)»«, I tliey had not got the money, and asked me whctlier 1 would not |b hold of it and help tbem out. When I got tliare Mr. Oliver Allies ■ in tbe ithatr; all tbe Boston directors and the New York directors lethere, and Mr. Cisco, and they told me, "Mr.Pondir, we want init&e- (ely $200,000 to pay coupoiis, and wobavo not got it.'' 1 told them, ;will write yoii a letter, and if you accept tbe letter I will ueooi^e V fiscal agent." I wanted to go back to my office, and Dr. Durant pped out with Oliver Ames and Oakes Ames, ftnd said, "Come in (B and write us a letter," I wrote them tbe letter in tbe office, and taot as long a time as 1 am telling yon, tbey said, "Mr, Pondir, We laccept it." They said tbey wanted $200,000 right away, and I said, Bud down to my office and I will give you a check for ljni00,000 on L The directors used to run about and bid up money on ttiemselv^, ithey used to charge from 1 toTJ per<^nt. a day. When Mr. Oliver ns made me agent for tbe road, and Mr. Uakes Ames and Mr. Dillon, pd them, "Gentlemen, there is only one condition" — and they bave jftter from me — "that you shall audittbcaccountsovery day from my KB. I do not want to hnve any responsibility." Tbey acceded to that, lleenttbemaebeck ; buttbeyhadsomany thievesiu tbe direotiou that ily it is a wonder to me that they did not run away with the rails of ^mlruad. I mean Mr. Jobn B. Alley, tbe infamous raseaL lie had E' icily to come down to my office tbe next day.to borrow $200,000 's, and to charge tbe Union Pacific Railroad Company I and lij , a day. That was John B. Alley. I declined to have auytbiug ffi with hiiu. He was tbe chairman of the finance committee, and be I the chairman of the executive committee. I reported that to Mr. ver Ames, and 1o Mr. Oakes Auies, who were the honestest men that ■ lived — Mr. Oliver Ames and Mr. Oakes Amos both. Tbe greatest mp in that hoard, who vilified the good names of Oakes Ames and jrerAmes, wasamun by tbe name of McComb, of Delaware. lie waa Bffect common plnnderer and thief, fommissiouer Akdersom. Please come down to facts, fho Witness. Those are facts. pom missioner Anderson. We invite your attention particularly tOi jtters since 1873. Come to that point as soon as you cau. Still, you 1 go on and take your own course, but 1 call your attention to tbe I that you are losing time in describing these men, whom we koow [about. me Witness. I only want to vindicate tbe names of Oakes Ames I OUver Ames, who were honest people. I do not believe Mr. OakcM K|4Ser did anylbing wrong. Tbey killed bim in it, but he was i a» 1 M ou ] be iw LUiea J akcM t M au ^J 440 IT. A. PACIPIO BAULWAV COMlllSSIOS'. C««nianoiwr ARtnuaKtR. We know bow ib« nxu) wiu built fmm 1M7 to 1M9, mod how the Umt or five different oontracu were madr how tboM coolractji were payable ; bow these nen got all tlic t and atoek »aA wcaritiea of the mad Joto tbeir hands, and we know It is Mtgtd that the; niftde from ttiiny millionii to forty millions of ilul- lan } bow, floally, in 1860, the mad wan completed. There j« no ne«n- dty goinfc orer that. It im all in other reportii made by other oomniit- Men. The WiTHBitH. I only want to irive tlie biiitory of the road. Tlii1vM, That is llie way the roail wjut built, I do not know yet witli wbfim [ dualt, wliftbcr witu Uiiioit PiiviDc iiailroiul or with the infamons Cnilit Mnbilior. To-day I do not know. Q, Wimt bookx liave yon dot f — .V. Tlie loan bookx. Q. What bookH are they; Poudir'a l>ookaT — A. Ye^, nir; Pondir't bookn. Q. Your books, showing these transactions T — A. Yes, sir. Q. Yon haw tbc^tm T — A. I have them. (j. between what dates do they show loans f — A. T fomid a M^ti tbe other day of tbe flnal settlement and completion of tli« Union Pa- cific Bnilroad in ISlilt. Q. Oan yon bring tl^o^e books iiere! — A. I linve got the ledger. I nm looking for the other ones. I have moved them so mneb. I will get them up, lis near nn I can, for you. Q, Do your bt>ok« nhow that any director of the Union Pacifla,at that time, miule an impro|>er profit out of them; loaiiK, that yon en point out, anil Bhow how much he made inmoiieyT — A. I nm tHIfn; ynu that Mr. Alley tnude a propoHition to me. Commiioiiouer Andguson. I want traiisactloiix, nnd not propo«itJ0P. The WiTNBttri. I never bad any tranRactionn with him. L think be \» the iiiottt contemptible rascal that ever lived. Q. PleuMido notRHythat again. Iwant to know whether yonrlwobi show that Sidney Dillon or Mr. Alley, or any of the other dirochns (if the road at that time, borrowed money for aecouut of the (wmpauyit ouo rate from yon, and charged it to the company at anothor rote, in dealing willi the company t — A. 1 would not allow such » thing iDm.T office. Uommiwdoner Anuukson. TIicu go on with your atAtemunt of fiuta. The WirnKKH. I have known some of them who have divided vitli people. Theyotl'ered to divide with me, but I wnnid not have anjlblne to do with them. ])ITBUNKI.L AND ALI.KY (IFPRKED TO niVlDK SPOILS. R.V the Chairman : Whoofieredt— A. IIUKhnell and Alley »tl'.>ivd tr. divi.ln wrllnnR. id todi- ~ ^n hiiu in the I JOHN PONDIU. i wonid uot bave »ii> tiling iit all to do witli suvU Irasli us tliiit. Altey eame lo me aiid offered to givp me $2l)ll,(t00 of govermuentB, and to di- ride with iiie the Bjioilti, and 1 kicked Uim out of uy otUce. He oQei ' ne that. Commissiouer AnsEiisoN. Alley is dead, ia lie DOtf A. NOjSir; be is liviug. iyommissioner Andeesoh. Where does he lireT Mr. HoLiffES. Ill Boston. The Witness. Johu B. Alley is living. Q. Is Bashuell dead t — A. Bushnelt is here. lie is this good- be is poor. ; Mr. JOBN F. Dillon. Mr. Busbnell is around here. I bavo seen hiui since the Cotumission opened. Q. Wiia not a enit bronght by Ames against Busbnell tried in the mperior court! — A. I really do nut know. ' Commissioner Anderson. Goon. THE union PAOIflC MOVES TO BOSTON. : The Witness. When the Union Pacific ICallroad was attacked by Boald and by Fisk they sent all their securities, in 1869, to my otUce; gverythiug. I was made fiscal agent of the Union Pacific Itailway Dompany, to borrow, sell, and do anything, as the directors were en- laiaed by Judge Barnard from doing any business. They could not do iny business. They could not move the company to Boston. I do uot tnow which of the officers in Washington told them, " We did not give ion a grant to put the Union Pacific l£ailroadinacar to carry it around kom one towu to another." The doors of the sale of the Union PaciBo Railroad Company were broken down, bnt there was uotbing in it. All he seenritics were in my ollice — everything. I attended to all their inaiiiess till they went to Washington, and I believe they got the privi Bge of moving to Boston. Q. Do .von know anything about that injunction suit; what it soagbt N> forbid 1 The WiTKESs. What injunction siiitt Commissioner Anderson. That Judge Barnard issned. A. Yes, sir; there was trouble, from the time that the BoBton , tame in, with I>r. Durant, for supremacy, and for taking charge* of |he property. Dr. Durant told me that the Boston ^>eople wanted )o put bim out. ne was president of the Credit Mobilier, and he iu- rited Fisk to subscribe to a certain amount of stock. Fisk went and pnfc his name down, without paying one ceut for it. The first thing that was known, Mr. George Barnard issued a grab on the road, and the final result of it is known to ever>hody — that tliey battere,d dowit the safe, the most infamous thing 1 ever saw in my life. Mr. Gt ^aa a partner to it. Mr. Gouhl was there at the time it was dou6^ Q. Who was the plaintiil" in the suit ! The Witness. In what t I Commissioner Andebson. The suit brought against the Union Eampaoy, in which the injunction was issued. A. Jim Fisk. ' Q. What did you do with those securities tliat were sent to your cffice T — A. I had them there, and borrowed money on them. There Were signed and unsigned securities, until I transferred them "■ ■ n people. " IT long did you have them T — A. About sis or fleven w«e,\ Xo^fipeo] m^wi : soujA^I large of ' wanted 1 he iu- eut and ad, and '.d dowit i| nPaoifl^J ' your There i to the J 1 443 V. n. pictrto kailway connseiox. Q, Tb«n tbn whole bonacw was Mat to BcMtoof— A. The wlioli tmitineMM wm urat to Boitofi. Q. An') it hitH remshMd tbere ever «nee 1 — A. I belierf- bo. I went r>u to BoNtnrj. Tht^y t«|p|i^pbMl me to oome od to Bontnn. Tbeyowcd iDf! fllxjot t3/jO»,0')0, wbich I borrowed for tfarai. Prom I*rotna>Dtaty f'Mnt to 0{;«)en, lite ttondji belonged to me a^inn llie earreocy ffii. ■ bi<;li I iiledeMi for ibein. There wm trouble alwat bnildinR parallel ronda. Q. ThatwaASlapI — A. Yeii,iitr. RTeiT-bady that borrowed niDttojr tiT bMTied money on thnne bontln lo me I gave tall on the market prioe. They nay, "I want to loan (100,000 or ♦200,00»).'' "All right. Wliat neenritiefl will yoo fcHveroef" "I will gi\-e yon Rrrip againnt mrreDcy Z?*," Then when the currency Gh were fine, HOtnetiineA they reneweil the loan ; and when the aeetinn wan flninhctl, they all utood in my name They made ont all the bilU to me and I delivered them to the iteoiilc, and they renewal the loan again for more. Tbey eommenred at UOaml went up to IfW. The laitt three or four ftectinnH l«-twpc« Promontrtrj I'oint I think I tmngbt a i>«rt. Tliey never conhl deliver me the bonili Mr. Dillon delivetod t«ffle tiie boncbi that tielongcd to the Crefli t Mobjliw. He loaned them to mo lo settle it np. T bad a great deal of troDblo Willi it IJTAJI noHTBKBK Bt.TI.T BY JOSKPH BICHABDaOK. Q. Tliere is one tranftactjon that yon were eoniiect4Ml wilb, about which, ]M>rhapH, yon know somo Uctn thnt I du not know, I wifih yoa would tell me, if you know, how it waM that the UiahXortheni wiuttiati!). ferrwl (o the I'nfon I'aeiftc T— A. The Utali Nortlieni wtis bnill by a man by the name of Joseph Kichnnlaon. IJc fiiruJBlied tbu money. Yoa are weleonio to see his iic<»)nntii in my books. Q. What were the temiK of hJH contriiet — what iltd he get from the company for buililing the road f — A. liu gave to •lubn W. Yoiiug, I Iwlievu (Uie son of lirigbam Young), one-fourth of the proflt8. I do not know the exact amontit. His ucconnt ix in inyolBce. Q. I want to know what did the roiid give to Uidianbum for buihllDic the road — how tnauy iHindfi and how much Htockf — A. Tliat I do not know. I know that no Monnon hsid an intereHt In the road when Mr. (lonid bought the intereHt of Mr. .bmeph ICiebanlnon. They were lioth directorH of the road. l}. Do yon know whether the road inNned to KtcbanlHori all of Itx ImndH and all of iIh Htock in payment for the conHtructloii of the roail T — A. It belonged to bim. He wax the man who owned it, after the fnilnre of ilolin Yonng. Q. It belonged to bim, beeauKe all the bonda itnd atouk were isstteil to hill) for bnililiug the road ! — A. Yen, eir, for bnildiug the road. No- body bad any interest in it. All that you see in the paperH in not trne. Q. Then )ie held all the bonds and stock f — A. Everything. I will only tell you what 1 know, that be came to me one day, and he Mtiil, " Juhti, 1 want $^(),(K)0 M [lay fur i-nilit." He kept his aceounts witli ine. 1 gave him tbe money, and he sent it, I believe, over to Milwaukee to pay lor them. They got this 4i3O,0OI), and the rolling mill failed. Tbey could not either duliver the rails, or give the money back. Uc wan the owner of the road. lie was a director in the Union I'acifie Itailrnad. Q. Whoelii^e were direetors in tliu Utah Northern, beuides Uiehard- •ont — A. I do not iwlievo there wan nnylMMiy. I believe two Mtnaor I Biigbani Young liatl an iuU'TenX. \» W. \ v\" ^^ft\ V-w^w -wUcther Sbur|> I AaiM>MlJy;rtt»Uiip» tteslMC JU* Dim •a< anrrlkn <• ada • laiai> •«» kiB atott IWniti faitr._»aig»»lii HI |i «Ib.Mi IXcAlkriBtabl^ •tac ili^ Pi* MM >■» !»««>«—« Ill l« I 1»J«>« KnHmii, im asnr Wn i> Ike Cikn PlMlfc r ~ ' ~ ■UiVlita*. Ibn « li II iMl III «ri>«» l»fc—i r III fill i«i»,>» iktlTaiM nil r I l« iHlknaUaw ■riisCmaaus: fi^ la ■>• Caia IMb l> B 1 ••«. Hi: A»dci>ng, k< ■ Ik ««« ■»> I •• matf-mx jam «f ace. lai I aaaK ;(n t arrnat aK laae aa a vitaen la p WMIkaial^ekmlL I aattaalUicli •a pao^ Ula I' II Urma. lf>aa>a»a»jlMat, laa aa. laiaa •aadlaaaaataaa>r.Bbaa. Cia«aa Jaaiaalf la beta tteWiiilM AMiiptL. JlLTaaiSMttfclai-aadfrDailhaeiwtha. Ub 9r. SaMt oaa latk I •« ay M Aa*ra Cunipd't, il lb aanar afWiS aaait. aa< Jata IM* aaa Miaz ailk TUa 8<«l, aal ItatalMaAaaasaat Da( caaaa i^Mdiiaaaia, "Ooaielliil aaat la laCMiaBe yaa ta the aaa pnaiMt. Xr. Ihaaiaa Bern.' I aaa>4 ^ Ttaa Swtaan fa aa. 'Mba, !»••>• jaailol' "(V iaya IMi; -taa aaa aa^aMaeA.* 'Oh, yaa,* Ttaa Seott aajl, "I kaiv Jato aiea W aaa a jaaaf aaa aad atea I vaaa roauiUK' laaaatBdatliaa'aalaHa. DaCaotaaL laali), "Toa.lin ailijaa plifcj wf* -W4jL'kaa9a,<'Jala,lkareeat ahanlmal ■ai^aia.' l»n«.-W>Mi»ttaalistni riM tejaa.* Oaaan'-UaaaaacAMtBaal' laan-'-v.-.^ uu laiti' 'ltaaaiaaMartaa«aaa ta gM l^iaaaW«»lai i. kallaaalkaaaiiiliu< it. -HiAN «|WH ili»al*«TT' -W<«.'kaaya, ■'»<'«t<>nli4 I as aaC caiae la pa; a aaa af ar a haala aoa Ikaal— JL 1 CUakei(bt; or ridiljlai iHaanaaiaksajaaavthiHl — A. Andrew j^ i,a» Ihe faataf Piaaiiaf. atoaa AadteaC juuN I'ofium. ,'Q. "VVLct cIho WiiH iu llif ruom UtsiiicB yoursuU' uiiil Tom Scott T— A. )dIkh1^. lleloru tliat UuQ' waa tlieru ; but wlien Duff went out he told ID Lli»L Q. Wbat iliil ho any wua to be done with those boudsT — A, They roiuiscft biiii to tuke Lhum lo reimburse Mr. Blatuo for the bonds. To ny tbe bonds fi-om biin lor Mr. Blaiue. lie told me that. MC. nf.AISE'.S RONDS. By Commissioner Littleb : Q. Who promised to buy the boiidn ft-om Mr. Blaine ! — A. Mr. 8ooU, bd tbe directors of tlie roiid. Q, Was j\Ir. lilaine to pay for them I — A. No ; they were to pay back be money to Tom Seott tor :M;(;ountof Mr. Blaiue. By Oommissiouur Anueebon : Q. Who was to pay baclc tho money lo Tom Seott I— A. The Ul| "aniflo Itailrond. Q. lie had loaned the money to the liuion I'lidQe Railroad T Tbo WiTHKSS. Who loaned tlio money T Commissioner Anderhom. You 8»y they were to pay baek tho money I Tom Scott lor account of Mr, Blaine I— A. Nobody loaned the money, hetmnds bclon^^cd to M^. Blaine. Q. How did lie get the bonds t — A. 1 do not know. Commissioner Anderson. Perhaps he Iwaght them 1 .The Witness. It was not Union Pacific lionds at all. It was some Uier bonds. Commissioner Anderson. Perhaps it was Fort Smith f The WiTKKSS. Yes; they had it out when tho election took place. Niey showed these bonds up. , Q. What has this to do with the Union Pacitlc T — A. Tom Scott was inde |ire«ident of the Union I'acilie Kallroad at that time. Q. What hits the fact that Mr. Blaine was interested in some bonds iiut were not bonds of the Union PaciOe, and that you saw them in tbe BQco here, and Tom Scolt talked aboutthem, uot to do with tbe Union bcifieT — A. I am only telling yon that he told me that everything was Iddled on Ihe Union Pacific. JQ, Wbat did he mean by that ! — A. 1 do not know. tj. Then how can we find out 1 — A. I suppose everyboily whs after le Union Pacific Bailniad money. Titat is tbe short and lung of it. Cummissionof Anderson. We will hare to aak you to bring j »ka here, and we will ha\e to anspend your exantiaation now. Tbe Witness. All right. I will bring them here. By Commissioner Littler : Q. I>o you mean (o ^tate to this Commission that Mr. Blaine received l^ty or eighty-two lionds, or any other number of bonds, from tbo itborities of the Union Pacific Biiilway Company, for some iUegitimatti Kieidemtiou ; is that what you mean to ssy ! — A. The bonds did not i tloDg to the Union Pueitic Uailroad at all. OoniinisBioner rjiTTL,EK. Answer my (jnestion. | The Witness. 1 did not stau- that. I told you that the bonds did [ lot belong to tho Uniou Pacific Jiailroad, but Tom Bcott told me that J boso boud.'i had to be paid by the Union Pacific Railroad Company for J ■t of Mr. Blaine. M JQudo not know, then, whether Mr. Blaine gave value received fl 446 U. S. PACIFIC RAILWAY COMMISSION. for HDy boudSf or any other valuable thing, which he may have receivtd irom the Union Pacitic liailway through Mr. Tom Scott, its president!— A. 1 do not know. I only give you what Mr. Tom Scott told me. They wanted to repudiate it, and he said he was in trouble. The Chairman. Have you any other questions f Commissioner Littler. No, sir ; not now. The Chairman. Bring any books you have bearing upon transactions of the Union Pacific and we will examine you again. . The Witness. 1 will. . Mr. John F. Dillon. I would like to ask you a question. * The Chairman. Certainly. By Mr. John F. Dillon : Q. You have not a very good opinion of Mr. Alley f — A. I think be is the worst man that ever lived. Q. Mr. Blaine was not present at this time when Mr. Soottsawyoaf— A. No, sir. Q. And Mr. Scott is dead ! — A. Yes. Q. That is all!— A. That is all. JOHN PONDIR. Nq. 10 Wall Street, New York, Tuesday J May 17, 1887. JAY GOULD, being duly sworn and examined, testified as follows: By Commissioner Anderson : Question. How long have you resided in New York ? — Answer. Since 1858 or 1850. Q. During the last twenty-five years of your life you have been liirjj:ely connected with various railroad euteri)rises ? — A. Yes, sir. Q. And interested in them in every way, as stockholder, bondholder, and builder, so as to be perfectly familiar with the whole busiue.ss!- A. Yes, sir ; I think I ought to be. holdings of union pacific. Q. Do you recall your earliest financial connectio:i or busiuessicoii nection of any character with the^ Union Pacific! — A. Yes, sir. Q. When was that ?— A. In 1873. Q. Had you not been a stockholder in the cM)nipany befoie that time? — A. No, sir. In the spring of 1873 I met Mr. Clark ami Mr. Schell at Chicago. Mr. Clark was the president of the road and be and Mr. Schell had been out over it and were on their return trip. By Commissioner Littler : Q. What Mr. Clark is that? — A. Horace F. Clark. And they spoke so liighly of the property that it induced nie to send an onler down to New York to buy that stock. 1 was on a trij) over the Chic;i^o and Northwestern, and I sent an order down, I think, to begin at 3.") ami buy the stock ; buy it on a scale down. Well, it seems that ^Ir. Clark was then ill. He returned, and when 1 was off np in the woods lie grew worse, and his brokers discovered that he would have to die, and they took the opportunity to sell his stock, and my orders caught it. After I got home the stock kvipt ftoiw^ v\o^\i.jaud I got alarmed about 'rff JAY GOULD. uul beifuti to imiiiiru into thu cunilitioii of the itrojterty, ami finally I t Mr. Altuy ami [ )Utkei-iil llioua of iloUars — iiud they baregottcumilHoDSof income bonds com- ; duu very soon," ami be said be did uot see how the company eoiibl rid a receivership. Of coiirm' that alarmed me. The (ttocli biHl yot. iTn to aboat 14, ami I iu*|iurod to see wbatdii-eetors there were that nU help to stand by tbe property. I soon discovered that Oliver je8 and Sidney Dillim wcne the two tbat could Ito relicrl upon. They I a liLTgu iiiteivst in the stock. I sent for tbom. By (JomtiiisMium-r AKDnitsoN : J. How largo was your owu intoreat attbiutime! — A. I think 1,000 sbart's. I seat for them and bad an interview with tbem. k Dp tbo financial condition of the uompaiiy. I fotiml that tbe di tors bad been cbargiuK a commission for imioraing, ami tbut tli« *a were curried at very high rattis of intercft. 1 protested against ,t aiid said Ib:it I would stand in and lake luy shuns of the notes and were to put it right down to legal interest. We did so. Shortly prwanl 1 made a further proiM)sition that we should fund this float- dobC, and I think I took a milliou of the bonds above the market, CO. We fnndeer cent, bonds — the sinking ids, as tbey are culled-:— for this floating debt to bo funded. By (Jonimissioncr Andebson : J, Please state what directors joined yon, or whether they all did. I think Mr. Oliver Amea, Mr. Sidney Dillon, Mr. Atkins, and sler. j. Mr. Freilerick L. Amest — A. Frederick L. Ames was not then »[6inent in the company. It was his father. J. Which wiis bis father t — A. OliverAmes. I gave almost my whole 10 to tbe property and gradually it began to tell, and 1 think wiibiu )ut three years we got it upon adividend-paying basis. 2. Ton wore telling us tbat you became a member of tbe boards !i«D was tbatt — A. That was in tbe year 1874. J. On what committees did you serve T — A. 1 served on tbo e committee and perhaps on some of tbo others, I do not remem- J. Were you cbairmau of the executive committee ! — A. No, sir. i. Who were the other members of the executive committee who re- ined on for a considerable length of time? — A. Mr. Oliver Ames, Mr.^ Iney Dillon, Mr. Gonion Dexter, Mr. Atkins, and, 1 believe, Mr. Ba- ', and one of tbe Government directors. I am not certain whether it »Mr. James F. Wilson or not. Of course, us we improved tbe con- loo of the property, the stock went up in the market. L^ltitu 1S74, tlien, 1875, IS'C, and 1877, you, were, during all tbat B^yUffiber of the direction t — A> Yes. sir. 4 Q. Anil fmniliur with tliunfliiiraoC ttie(Mim|taii.Y gunenilly I — A. 7e«, sir. tj. Did yoii go over tlio roiid youreulf iu {>er80ii1 — A. Yes, sir; Wlce a year. Q. The whole lengtli of itt— A. Tbo wliolo IcUBtb of It; yoe, dr. (J. Did yon make any esaminatiou ofitsUrauolie^ itt that Ume t— A. Yea, Hi r. Q. Before we pa^M to that, bad you any [Hjrsoiial eoutiectioti wbatuver with a suit brought by Mr. FisliaBaiiiat this comiiauy iti IWHH — A. Ko, sir; 1 never had any intorostiiutil this time 1 Bpealt ol'. <}.. Did yon know tliat that suit was brought 1— A. Ouly fttimtlie newspapers. Q. Did you know it from any conversation whatever i'rom Mr. Ffsfc I — A. No, sir ; I had all the business I could attend to myself, aiid I did not know about that. Q. Had you any csontiuKent interest in any possible subscription by iiim for stock of the Union Pacific T — A. Not a dollar. (J. Do you know who bis lawyers were iu that suit ! — A. I Itilrilf I>* vid Dudley Field was one of them. I egan to take an interest in that property. Q. You knew the Kansas Pacific road, and where it vraa located, I early iis 1S7.3 and 18T4, I pi-CKumel — A. Yes, sir. Q, But you say you wen< not a holder of any of its stock or bonds In fore some period hiter ! — A. 1 think not before about 1878. Q. I>o you recall the suggestion of consolidation between tLe B Pacific and the Union Pacific, with which you were crediteQ. Had it aconnection with the Uniou PacifieT — A. It was owned by ivCTuion Pacific. It had a connection, I think, over Che Denver Paeific. Q. To what T — A. To the ITniou Pacific. It used that as an outlet. Q. Where did it connect with the Denver Pacific — at Denver 1 — A. At bvyeune. Q. Cheyenne is also the conueetiou of the Uniou Pacific! — A. Chey- JDO is where the Denver Pacific and Uuion Pacific connect, and the enver Pacific was the link between the Colorado Central and Denver. Q. The Denver Pacific was the link between Cheyenne and Denver I — . Yes, sir. Q. Between the Kansas Pacific and the Union Pacific T — A , Yes, sir. Tyuu are not familiar with it, I have a little map here that I can show m. Ouinuiissiuner Anderson. Wc will took at the map with pleasure. Tlie Witness (describing). Thin is the Denver Pacific from there to ten. The Colorado Central ran up here. There is Georgetown. Q. What is this road t — A. That is a road we built out, because the ivuver I'acific made such »n extortionate charge. We built a branch 3»a there to connect with the Colorado Ceutrat. Afterwards we built luunt. Q. When was the branch you refer to built by you to connect Chey- IDO with the Colorado Central t Iu what year was that ! — A. I am Irta very good hand at dates. I could not say the precise date with- M refreshiug my memory. This little greeo line was the Colorado Cen- W, as the Uniou Pacific first bought it. It ran from Denver up there id ont here, aod they had to get out over the Denver Pacific, and the ■enver Pacific charged so hi'gh a rate that we built that line up through ten [connecting with thoUuion Pacific]. By Comuiissioner Littleq : Q. How long is that ! — A. About 100 miles. AGBEEUENX BETWEEN UNION I'ACIFIC AND EANSA5 PACIFIC. By Commissioner Anderson : H, Do you not remeiulxir that there waa au agreement made betwec 29 P i£ ^••*rtrmri( •**• tmiim tM* —■■■■i*iKl»lwtMTlfc*r«M«Firt>i,Mitiita biL Q. TW rtaint La«M peo{>ie ««» the Kaa— Factfto iH-nplv !— A. Yo^ dvj at tkA tiMC. <). OaaxMMNUO w«haitVMttatlbMCtIAT8. g. WMttoaCboiHMewljMlSTCT— A. Ilhiokuxr. <2- WaethatcMMtriKlioiift panortbbeofiu-Klllint wHHjioiBKuBlit- t t«;t tlicir iiitemU io Cdurw)'>. Q. Wliat wa« the elbct of th« ronstnctiiin i>f Miv Cotunulu IifmkL an yon «mHtnid it, on Itic Dvd%'it Padlk; I — A. I do not ItDow; I nlionld lliilik it »joanaMBriHr«lMlfcartlHMb(NidA wenaQbowflrtkjrml t iMr tfm— crioiw and i> larg* yoekx, or boBght ra miawroiBi tnan. " WMnt* f — A. I do aot nrntmha ; I prefer to sin jit ^ ItojsareMtabwtiM pries pndbjjoa far tb«ae ioeone lni^t~ Ve; I do wN. Q. At what price an tlwy cntend in tbe fin»dio£ aenciBeMt-A Th^ an entef«ri at SOt. Q' I>o joa rBmawhCT tlie fact that tbe; wtm entered is thatagm ■wnt a« a mseb hifber pnm Iban tb« ptiee paid bj jr cm f — A. No; I di tiot ; 1 prcaoKM tb^ wfoc. tboagb. Q. T>o joa noDeaiber ttey wars ai a bigber price T — A. I p Ibrar vera ; bat I do not reaiwber tbe fact. Q. Are joa Dot qnitepcMtiretbattbej were txHiKidersMy liigtiFrtfaa wbst y,Bir. it baabeeaaoIoagKgo tliati badu rMar%f^\ my mind witb iL (/. Dojonknowtfarmtgh wbatbroken'ofllr.eii tb««ebontli« wennDCtfij tmuffbtl — A. No; JdoDot: I doootreaieubert»t what I IwughlUu of the Haint Unan pwiple. ' (/. I>o yf« know I'. J. Uoodbartt — A. S'eii, Kir. H, l>id Itf-at (bin tio>e tlit-m Ut nii;. I do not reaieuber tbat 1 gavu liim liny ordfiM ro tiu.t. 1 mi((1it Itave aaid that I would take iKitnlii at a ocrluin prii^^. 1 ofteudid tfaau Q. Will yonr book* abow who Ibe broker wiw in thcHe ti^nBaoUrHal- A. ook8 will Kbow fruto wluini I bnii^ thom. Q. Do yon rrmeinlicr with whtit pcnionii yuu voufeireil iu rex"^!!! tliiM iKioIinjf a^MMuuutf — A. 1 prGHatno tlic pentoon wlio8« naniuBU* ii\g.nvi\ thurc. ovs not the Hnbjuct- matter of this afp'i^inent jireaeiit itself K your niiitil ijiiito clearly, now that yon liavo rejul it over! — A. "YftS-lit ibat if tiio biHJH uf Ibit funding of all llie inniiuiprnblv tR-uiiritiiw llit unu i;oiiaolidutcil Iwud, That wua a preliminary steii to putting tl liroporty ou ita ft-ct. Q. Will yon pleiiw? t«ll un wuat OitBoiiltieit pxiKtlug bfrtwet-u tl buldi-raof Mifl diQiTuutelaH^VAoftferiiritiofilmil lerJ toiKgotiationsifhK uulminiiti-d in tbifi i>oecans6 the i nt^rest cliarge would have l>eeu largely reduced 'Uhdrawing all mortgages on which interest was to be |>aid, e.\cept .ftrac mortgage and the (lovernment mortgage, on which interest not in fact jtaid. ricase rea<] that last section and see if that was Uie scheme. be Witness. This seems t« be to convert it into stock, instead of in. bnitnissioner Anderson. Then that was the way it first took sh: , tiie liens should be consolidated or masseil together and retired jmn in that pafter, and then converted into Hto<:k 1 ;8S. Yes, sir. That, I think, was found iwvciviWvvCcXft, EI*- 8E I Of d 1 rf . TflL IteCf— A. l4»MtkMv. l4*MSCldrtlcTCrn«4iU»|i^crMH I AMc r >MCl«fMl it kMirtiC vtiaC tW «ft»MS «M. <|, TW»i>»l— JBU »%— e— nypgf — qfof tbe paituw. D )riM«MttMM«hcrMa^lHa«hfMitM iWtMcS— A. Mr.DatiBn, M|iy iM. e— toU y— tf rfwt lhi». Q. WhiC I VMM to lno« !■ vfeccfccr be dnirHl »ay ponkm of U liMtiiwrtna ft— ywi (» [wqwriif Ifce Mtidea T— A. Idoaodnmr. M plaa «M the e— olHateJ itpny. Tkal «» lb* oatf thtat; thit Mwr laliu4 of vftb |wtiM. I dsd aot tUnk pArties would ever n rCB^v UKir boodi uhI take Hbxk, sltbovgb I wm viUiDC to lUI M Muythiag tint tbe olbrni eoald tarry tbroaiifa. ROW FBIcn WKXS msD. Q, Vod iirreed in Ibat iwiMrr to »owpt 30 for the hond* wliicdi j» [tlarMl iti lltal (wyil, u I notW. In tbal not •— !— A. Vc^ Q. How wu tlH< fl(nirc3iJatTirr Roinf; tomoktl lii-itvy loKit, onlo yon ronK-ml>pr nu kucIi tiling f — A. I do tiut r whitt my IMliifc wan at Lbnt limt-. (J. Alt a imatvr of fiict, in it not truu thut ul 30 tbom- WmAa wonU lirinif yiiii in a kthhI dvul mom lliun LUey woali] cost yoa t t loflsii Ul Imnda rorwIilcTi you Hnbm>ribMl through that itgrei-munt. — A. I HnMii^ llii-y woiili). If. Ih i( not tniu tliut tboni; rateit wrv fixed )it RoiOL'thini; above tiri i-.iirfr-iil rHlfKof tliu Hi-curitfi-fl, and wlti< inton in ami nnlN Willi 3011 1 — A. I do not know who UzmI thiit. I lio nut know' niiii'b I liiul to ilo with it or how thi; valncM rnnic to he. flxeil. (f. lliut tlU'V mil Moint* rt'lutioti to thu rcliktivti viilui* of thu Kccnritii-*'' A. VfK.Hlr. ii<], iiwl Hinua Kiontor v.\ahn, I lliink; liii> ini;om<) boniU ■IN tlii^y\srrii oriurnully Inhui^iI, liiiii cerliiin I'w.nti on tbn roMl, bdiI tliliili tltoNi^ Mull iillowi'd llji'ir Ijonils to 1)1! Ht:ini[>(>il ntamiied thuntli Ii>t iiiKflluT IiiiikI III iibfjiii. Ho tbiit llii' nnntiiinpfil liondnwcrf (■red liH biiviriK n liirlit iK>tt«'r lien tbiin tbo Btauifwd liondB. I}. And Itiii Hraiiiiicil lK>ndNW(>re called tbttanboniinated income tlminnttiinipiMl lioiulBwenjciiiled tIn>miHnlH)rdinat»"d iuoonint— A. ' »ttr. Q. ir tliiM l>t< m>, Im it not ovidcnl Mint tbe valnen, an Htntail in lb jwi/itir l)Pri>re yuii, UimV MVww'.eln Uwvw-.V\v^\ \alaea of tb(! (liflt^ri'nt prop JAY GOULD. 455 fties euteied on tbnt tbat list, anil that ia tie- rcisou why the uiistaupeil Dnds are rated at 50 nuil the strnnjied boiitls at 30t — A. Yes, sir; but His was gotten up to be about as fair a basifi, of coarse, as with our Dowledge of the ,propert.v we coald luabe, if they were going to bo all it in together. Q. And the object was to attract other persons to come into it, tool ■A. Ves, sir, Q. And to make a general reorganization scheme t — A. Tcs, sir; that JB» .the idea. Q. About what percentage of the whole outetandiug boude(l(IO np to the 394th mile-i>ost, the other mortgage of *0,0(»0,000, le Denver extension, and the Government subsidy mortgage, and then le 44,800,000 of stock ; that would have been your company, as reor- HtiEeD8olidated mortgage instead of a stock cunsolidation! 1 call yourat- itition to the fact that the agreement you have before you was dated 1 .^pril, 1878, and the consolidated mortgage is dated May, 1870. — A. r was between these periods. I think it was very soon demonstrated lat this would not carry. Q. In what way was tbat demonstrated ; by parties objecting to take le stock T — A. [ do not think that any one but the insiders seemed to B willing. The outsiders would not do it, It f^l through. .Q. You wanted to get the outsiders in T — A. It was necessary to have wybiMly in to make it go; otherwise, if we canceled a part of the pnds it would only make those that lay biick so much the better oil". WHEN CONROLrDATliD MORTGAGE TOOK HHAPE. Q. Tliose who declined to come in and retain their lien would have pri- fty over those who had come in and taken stock. Now, when was it >at the ccheme took theshapeof a consolidated mortgage! — A. It was ibsequent to this agreement, but I do nut remember the date. . Q. Was it before the SaintLouis people were broughtoutl — A. Ido >t remember that. Q. Do you know who drew that mortgage! —A. I think Judge Usher Irew tbat mortgage. Q, Was Judge Usher in New York or out West! — A. A part of the D« out West, and part of the time in New York. Q. Did you see him at this time and confer with biin in regard lo the of tLe mortgagef — A. Yes, sir. 1 J S. PACIFIC RAILWAt COMMISSION. Q, Have yoa any correspondence with Judge Csher thnt rvlatei to tbifl mortgage I — A. 'So, 1 hare not Q. HsTe yoa any letters in a letter-book oontaiuing Uie letters to bin, either in tbe letter-press book of tbe Dnion Pacifln, or Id yoor own prl- rate lettar-prcfls book t — A. So, sir ; ny cooimaniaition with him w» •QTerbaL Q. What waM the object to be attatoed by a oousolidatnl inortita^i't Was it aobataatteUy tbe same, sabstitoting a morliiafc** for stock U A. Tte olgeet oif a eomoUdated mortgage «a« to Tund all this heleroe^ ■eoaa ■■•• of aciaiittea into one Daifonn security, and at the same tiiM to Bake a aaviBf ib tbe aowial tateteat charge and also in the prind' lalQf tlMdciiL <^ Th* iftial Beatiiie to mukt this a sooceaa «as the estidilUi. mtmt iif ■ niMMBiiilj iif iili^ ■hhiiiihiiiilil be acceptable to tbe holden If 111 ill III riiiiri iif iriiriliiirT 1 Yrs, air; that [a, that thrj swld p« IhMi ia OB ffaia baaia. Q. Ami Ite baaia matt be aaefe aa to be reaaonaUe and acceptobleu tW heUen «f inxritaeBf— A. Tea, A. Q. WkaC put did res take ia Oe diacoirioa that ImI toa setUemeDl •f thcaentaaS— A. I Baat have taken • pceUy promincflt part in it Q. WiA TboB did jM«aaaa the Matter 1— A. I probaMy dEseiunI it with Jad^e Cater. Fti^apm with Mr. Boteea. <^ IM jaa Ht al» Amm* that with the repieaeotati vea of the to- nantaaar* rtated la Article 'i3 of the The VnsaK. TaisaE. «|. Pwy— sifctf w»idh»a— waaM-MBiiaaiBB tothatotttti ptaflfcafciMwarfjai^aiitiniat ».3fa; Idaaotaeekowlhm esridbat. d that tbe hoMen Jft«a«atarV-.A. ««A.ihM«aaiB|Hir m |Bace of lUo policy of making tlio mortgage as small as posaiblo — tlie l|nso)idat«d mortgago. My mark was, I tbiuk, to save 4500,000 m tbe fed charges in the general scheme ; and so we began to cut ilowu, W© Anted to set the example ourselves, and so we cut off our own. Those mds were held by niyaelf and Mr. Ames, largely, I think. Q. The funding bonds T — A. The funding bonds. Q. What led to the issue of these Aindiug bonds t — A, I think the dnt Louis people in their effort to carry this load had to indorse t^ely, and they got u]) a secnrity that would protect themselves, and ey pat in all they conld in the shape of floating securities, so that in y event they would be good. Q. The amount of the mortgage was how much ! — A. I think it wna biillion and a half; but 1 forget- Q. And the rate of interestt — A. I tliink it was 10 per eenl. ais jieoplel This was before the Saint Louis i>eoi)lu hail ten bought out 1 — A. I do not know whether I bunght these bunds of em or whether I loaned them money. Q. Wbetlier yiui loaned them money at the time the mortgage wan Kt ina Mlidittcd flrat-mortgase bonda for two<>r«n«li l'ond*t>«f«qi1ul Muouiit, wUti ■Ilortf- elite coiiponB aDnoxuer. Q. How much of tlie incomo bonds iMstied remained niwtiuiiptHlf— A. A minority interest. 1 do not remember the ummiut. Q. Do you remember tbe named of any of the prominent holdenl— A. I do not tliink the company knew, really ; it biid becm pretty Irwalj ilont- ; I ilo not. remember the n»ines of any of them. Q. What ^^ronnd had yon for assuming that thotie boldnrH waaliln" cept the rate of fit) cents on the dollar 1 — A. Wo hut not asked. THEORY OF THE CONSOLIDATION, Q. Was it not something more thiin a mere effort at a giiessl— ^' No ; my theory was that this new mortgage would very soon uasame ik pn^tty high plane ; tliat it would bo a complete mortgage on Uie uiitin property, and that holders of these underlying securities would ratliiT sun-euder tJieir bonds and take a cnm])Iete security ; that is what I re- lied ui>ou. That is, making tbe new securities uiuro attractive than tlie' other. Q. Were yon not guideil in fixing that at 50 per cent, by the market price of the Btitmi)e(l income bonds, in some respects t — A. No, air ^ I do not think 8o. 1 do not think there wafi much market price al)oatit| I guess they were all pretty well tied up here. Q. The fourth clause is as follows: l''or Ihe stanped income bonds, witb all past duo coujhhir aiiii«sed TinMUrt- Kiine bunds for ten of iho eianped inrumo bouila. How did that provision come about t — A. That was arrived nt in tiA same way that the general basis was. Q, Why was it only 30 for these bonds, and 50 for tbe prior claesf— ' A. I do not know, Q. It was becnnse they had been subordinated, w»8 it not,tDaCk other mortgage 1 — A. Yes, sir ; they iiail been sulurdinatctl, Mul tiug were fixed here, 1 think, in this scheme at 30 cents. (J. They were so fixed because they wore considered of loss vnlne tliun the others t — A. Yes, air. Q. Did you confer with any of the largo holders of the sulKirtlliutal income bonds, so as to arrive at this figure of 30 1 — A. I only ' those that signed here. Q. You yourself had signed for over 102,000,000, litul yon noli— At Yes, sir ; I did not know any of those, excepting as to thnt. Q. Did you confer with yourself about it t — A. Yes, tiir; I eoafHrm th myself. Q. And you thought that was a rnirpriuo! — A. Weill; I tlraa^li it was a fair thing for me, it would bo for othertt. Q. I8 that t!ie price whicU yoa took for ycnr boiuls wliicU were in tbe mlin); ngi-ecmeiitt — A. Yes, sir. Q. Thirty cents I— A. Yes, sir. Q. For all of the *2,000,00()T— A. Yes, sir. Q. WJko managed tbe Ixisinese of this puolF I uieatciHtotlie firriireH, Unl wlio kept the secaritiest — vV. I do not roiuombor. 1 Q. To whom did you deliver your $2,000,000 of honds T Tbe Witness. That is, when I got the consolidated, tho new bonds 1 Couinumioner Andebsok. No ; whfu you pot them in the ]idoI. The Lzecutive committee named iu that ugn^ement have Htatnd that all busti secaritleH were deUvc'red to theia i'or safe-keeping. A. I mu«t liave delivered mine to them ; yea, sir. Q. Yon would uot deliver 8li,0lW,lHH) of homls to any i»eraon ud1cs» foa bad full eontidence iu him, would youT — A. Tliero were trnateea ippointed. Q. Do yon not remember who were the persons who acted in that opacity! — A. I think Mr. Villard, and Mr. HoLUES. Dillon and tiago. Q. ThenameHarugiveuinthe pa|)er T — A. Yea,Bir; the uame.s sjieak for themselves. Q. Is it year recollection tbat you delivered np your securities to that ommit.teef — A. I do notkiiow whether I did or uot. Of course I knew f 1 signed I had to deliver them, but whether I actually delivered them . do not remember. Q. Do you reoieuiberbow the iutere-sls of thedifl'eront imrtieB to that ereetuent were keptt — A, No, 1 do not. Q. How would yon know how many bonds you were entitled to re- eive when tbe consolidation caiue to lie made effective t Tbe WiTNBsa. Would not thin i>aper show that 1 Commissioner Aitdebsun. It would if tbe accounts wore kept prop- rly. Tbat paper simply shows the number of shares of stock which 'on wonld be entitled to on the theory of stock iasne. A. I thought tbe consolidated bonds were made up on the bn«is of Itese bonds. Q. Do you mean tbat the commutation rates stated in tbe con.soli- latioQ agreement are tbe same as those stated in the pooling agree- nentl It might be so ; I have not compared it. — A. That is my rec- li«ction. Commissioner Ltttler. IIow is tbat ! Mr. HoutfES. Only to some extent. Mr. John F. Dillon. I did uot frame tbat. The WtTNESS, I know that we had cut and tried with this and had irobably to moilify it a little. Our exi»ericuee had shown ns that this ronld nob go through, and then we had to try another tiling, and we tied the consolidated plan. '. Q. If there was a modification of those terms made, you could not jB(y Ou that agreement to determine bow miiny consolidated bonds you rare to get ; and I ask yon to state, from yonr memory, bow it was tbat ■ou found out how many bonds yon were entitled to get. — A. I mnst lave found that out from the books. 1 have got an account of ail this roiisiuition, wbicb I saiil I wonld be very g1iKl to funiisb yon, Imt I do lot charge my memory. 1 am in so many things, and 1 do not like to peak, because something might come up that would refresli my mem- wSt ^^ '">' books are at your service. Ko^lp 1 midvrtttand that your books contuia a complete sccouut of M ■- d S. PACIFIC lUn.WAV t'OMUISSlON- ^^^^^" the pool transactions, or ouly of your owiit — A. Ouly of my own, prob' ably. . Q. Do you remember whether that accouut was kept by Mr, Moro- aini T — A. I think he kept it ; yes, sir. Q. Do yoii remember that under the pooling tranaa«tion yon receiral what were called reorganir.ation certificates, isMiied by Mr. Ham!— A. 1 do not remember it. 1 premimo hedid issue them. Q, Mr, Ilam ha« stated that the interests of the parties were com- puted on the b;tsi8 of the pool, and thaft lie kejit a cerfifieate iMob ami issued to the different parties eertittcat«a for the amount of dollars thut their different interests showed them to be entitled to iu the reorgani- zation scheme. Do you remember having such a certificate 1— A. Ho not know ; Mr. Morosini would know. I left, all those matters to him. Q. Where wonhl that certificate be, if yon ever had one 1 — A. I prp- sume it wouhl be surrendered and canceled, with Mr. Ham. Q. anrrendered and canceled for the bonds f — A. For the bomlH. 1 think, now that yoii speak of it, there was some sort of a prelimiimry certiflcat^t i^sned, but I do not remember the form of it, or what bccauio of it. KANSAS PACIFIC STOCK. Q. Confining my questions entirely to Kansas Pacilic stock, we an' informed that after the agreement was made there was an agreement niatlo by which the stock of the Kansas Pacific was withdrawn from thiU ■ pfH)l and that you, either iudividnally or in oounettion with others, took . up or withdrew all the stock that was iu that pool, this occnrring afli^r the Saint Louis parties had been bought ont. Do you remember that transaction f— A, I remember that after wo had made the consolidaieil mortgage, in which we put in all these bonds, then there was notLiuR left but the stockj and tliiit, of course, Wiis diviiled by the actual jinrtii's that owned it. Q. How was it divided t — A. To the owners, I thiok. Q. Who were those owners T — A. I was a respectable owner myself. Oommissioner Andbeson. I have no doubt of it. The Witness, lint who all the others were I do not know. I can't tell yon how mnch 1 had. Q. We will go back a little, then, to the parchase of the Saint Ixxiis interest. Do you remember buying out the Saint Louis people T—A- Somo of them, Q. All of those whose names are before you on that agreementi— A. I do not know whether I bought them all ont or not. Commissioner Andrbson. Look at tho names. The Witness. I think Mr. Greeley staid in, but I bought some of these I see here. Wliether I bonght all they had. I do not know; W my books ought to show. Q. Statethenamcsof the parties whom you bonght ont.-~A. IshonU say Mr. Perry, Mr. Carr, Mr. Meier, Mr. Lewis, and perhaps Mr. Edget- ton. I bought some of them, and perhaps alt. Q. What was it you bought from themt — A. I bought their stock, I think. I do not know but 1 bonght their general interest. Q. All their interest that appears on that paper T — A. I think I did; yes, sir. Q. Is that entered on yonr l>ooks so that we can seel — A. I thinkso. Q. Do yon remember what yon paid, as the gross price, to the Saint ZoiiM people f — A. It seems to me I paid these prices, bat I am not QOR' 9 Was it 11,200,0001 JAy GOULD. iiLere»t iu tha^^ lie WiTKESS. Tbat I paid Ibuiii ultot^c-lliur T 3iuniissioDer AMUEBt^OK. Yes. . It may have been. . Mr. Bagu lias stated to us that he took a oDu-sixth ii ^ase. 1)0 you remember that lactl — A. ] know he took an iutetest . He says it was one-sixth, and that ho \md you $20U,000, in hia cmeiit as furnished to us. Does that agree with your recollec- T — A. I ilo not know J I wilt give you the nccount itself; that will I the exact figures. DUimissiouer Ande KSON. 1 show jou the entry iu tho accouut as laa state^l it to us. Please see if tho securities uieutioiied there, and nmouut of the respective seeurities, and tho priee and i>eriod agree 1 yonr recollection. The 18th of March, 187i), is the date, lie WiTHUSS. You refer to these thi-eo itemsl ommissiouer Ahdebson. Yes; hisstatemeutis that thatrcprei twelfths of the Saint Louis purchase which he took from yon. lie Witness. Yes, sir; I presiiiue that is true, of course. . What is the meaning of the third of those items I What is iti . That item is as to tho reorganization ccrtiScates. That would he tied to 4200,000 of the consolidated bonds, I suppose. . Then the reorganization certificates are these same uurtiticiUeH I was iuquiriug about a while ago ! — A. I should eay so. . They are those which Mr, Ham referred ta ! — I should say so. ■ Do you remember whether this sale of a one-sixth iuterest to Mr. e was made by you to hira at tho same price which you paid to the it Louis people! — A. Tes, sir; the same price. , Ho that we may assume, then, that the totiil purchase made by from the Saint Louis iwople was six times the amount stated here six times the amount of these securities f That is, six times $29,000 lortgage bonds of the l>enver fisteusion ; six times 7,185 shares of k and six times $200,000 of the reorgauisation certificates, aud that price you paid for them was six times $200,000t — A. We will as- e tha^ provided I sold him just one-sixth. I think tliat I must have ly books a statement that will give it to you more in detail. I do QDderstand that, and 1 would rather not talk by somebody else's C8 [referring to the account submitted by Mr. Sage]. . We will accept the corrections from yonr books. Did any one else, i])t Mr. Sage, take » part in this puruhase from the Saint Louis lief — A. I do not know whether Mr. Ames took some aud Mr. Dil- :lid also, or not. I trieil to get (Jommodore Garrison in, and some TS that we thought would help tho pro^ierty, but they did not succeed le case of Commodore Garrison. I do not know whether Mr. Auies Mr. Dillon took some or not; I offered it aroond to them. . Yon took this all, in the fii'st instance, and then suggested to these :lemen that it would be desirable for them to unite with you I — A. . Who conducted this negotiation with the Saint Louis people 1 — [ think I must have done so. . Which of the Saint Louis people did you seel — A. I think they e on here and saw me. They were dissatisfied, and kind of tired and wanted to sell, and they made a proposition, and I accepteil it. d my own views of the valnes. I told them they might put in as h or as little as they pleased, or I would take it all. Whether they KI could not say. ave stated before that you thought that the price was teacb^^^ 4(12 V. H. rACllIC RAILWAY COM by I'olluwiiig tlio terms stated iu tbu pool i^n^'emeot ; bn(, a* y«ii will »<.•.(>, in the bmly of the reorgauizatiou rertillcates IbumselvM, joiiw iu»t etJcct tUat coiuputiaion, unless jou remind thv shares of strick tlimwii ill, without charge, or else, peiliiips, the Hbares hiwi Itwn lakfu lint before f — A, I presume thereorKauixation wrtifieates wirrieil acCT. taiu aiiiotiiit of utock and a ccitaiu amount of boutls with tliirm. They must have done that. HBOUGANIZATION CBBTIFlCATKa, t/OnimiS8ion«r Andebson. Not if tliey are made on tlio li:uti9 uf Ihn paper before you. The WiTHESs. If they were made on the battle of thin (JaiuT, a iwf. ;;anii!:ation certificate would cany these bonds and thin Mock, iiml a I'curganizatiou certiticatc would be issiierl in acrordiiin^ with ttiU priw. Commiasfoner Andebsun. The ruorgauization eertilieale wnuld elude tlie vaino of tlie stock auil the viilno of the bonds f A. Yes, sir. Q. And therefore, iu baying the roorjjanizatton wrtiliewtci it w« really include cverytbiun except the first- mortgage- liotula, mid Iht-re wonUi be 110 stack to sell t It would be included in theceiliOuiiIti, iiiik** the stock had been taken ont of the pool Isefore the date of Ilits |iiir- ehaseT The WiTNEsa. I could uot say a« to that. (Jomniissioner Andeeson. Mr. Holmes, if yoii can gi\-« iioy htianor lion on this |K»int we would be glad to hear you. Mr. HoLHKs. I think Mr. Sage maile his entry in Unit wiiy for lti» purpose of indicating what was represented by the oorlilicutt's wWth were bought from the Saint Louis people, and that tliere roally is sdoid entry there, the same tmusaction being entered twice, the Bt«>ck hvint inclnded in the two handretl thousand. Mr. Gould snys his books nm show, and I think it is mnch safer to rely npuu his entries in thut inatM than those. The Witness. There ought to be some books. Somebody must hw kept the acconnts. Commissioner Andbkson. The object of the question is lo aaeerft from you, substantially, in this transaction, the price which yuti pi for those 42,000 shares of stock. We nnderatand you t» s»y thut it i VJjj cents, as far as your recollection goes ; that is, that it wtis at t same price container! in the agreeuieut. The WITNES.S. Well, I just bad that general iinpressiou^tliM tl Clime on and said tbey would like to sell out, and I aU!;;Iit ubruiul waa tlie Denver Pacific boiutB From tho QistvniuiD |)VO|>li.^j, I dii not know but be pbivecl suuio vt' thuaa witb ^. Perkius nt tbe bunk. J ilo uut kiinir altoiit tb»t. Q. You do ttot reunguJKe tbat trannaotioii 1 — A. No, sit. <^. WUnt iire rwlorreil to by " reor^nizatioQ bouils"! — A. I do itot low. I slioiild suppose be uicaut uoiisobduted bcjuiU. Mr. Holmes. It wns before they were insiied ; before tbe diito of iBds. Wr. JfJllH !■'. Dillon. It may biive been tbe certificates. Sir. Holmes. The i>ool cerliticiites, 1 thiuk ho meant. Commissioner Andebson. It may hare been certificates which tl«l the bolder to consolidatfHl bonds. Ttie Witness, Which entitled them to tbe bonds. I will try to en- ;hten you ou that. Q. Yon do not recall, then, jmy other purchase of a large amouut of Dck, in one lump, of the KaoKas stock, except thia purchase from the tint Lonis (wople f — A. No, sir, Q. Do yonr books show th« different purchases of this Kansas Pacific ock made bv you, between tlio Ist of January, 1878, and the 24th of lunnry, 1880 !— A, 1 think so, Q. Have you a trauecript of that account with you I — A, No; not of ut account; I will have that made; I will give Mr, Mink access to lO books, and I ibiuk he am dnuf it off. Q*. Bow much of tho Kansas Pacific stock did yon accumulate during Bt iMjriod, or how much did you own, wo will say iu December 1879 ! — . I tbtak 1 owned about $4,01K^UUU of it. a. Forty thousand sharesl— A, It would bo 80,000 shares} 40,000 labMt*. H. Does tbe amount for which you signed tbe articles of ratification Ikwte correctly your owner.'ibip, prior to the consolidation t— A. I do t know what 1 signed for. CoDHnissioner Anderson. Judge Dillon will show you. The Witness (after lonkiug at a i)amjiTilet whiub Mr. Dillou banded him). I can tell you just what 1 owned ; I di>ew that off, thinking n vaald want to know tbat : that is what 1 owned of the two stocks itbo timu of tbe consolidation [handing paper to Cumuiissiouor An- nonj. Q. Forty thousand three hundred ubares of the Kansas Pacific ; tbat , dnli shares, as I anderntand f — A. Yes, sir ; I owned 27,000 shares Union I'acifie, and 4O,.'fO0 fall shares of tbe Kansas Pacific. Mr, Job:( F. Dillon. Those weie tr>0 shares. inieWnifsss. The Union Pacific was 93|^, and the Kansas Pacific . Q. How long had you owned tbat Kansas Pacific stock, or the bulk is T— A. 1 got lb through these purchases. QL Ho^v much of it did you get in tbe Saint Louis purchase ! — A. I > not know; I will give you tbat account; I cannot speak from memory. Q. Yonr books will then show all the purchases and the prices paid, Id tbe brokers' oQices through which tbe purchases were mtulel- YeB, sir ; they should show that, and I presume tbey do. Q. In regard to your interest in stamped income bonds : When did n first commence to purchase these bonds T I see tbat was prior to B agreement of 18T8. — A, Yes, sir. Q. Do you recall bow you civuie to interest yourself iu those bonds !- Mo; 1 gradually began to take sui interest in tbe property. Did you not buy tbuttu staiiii>ed bonds as low us 10 cents ou the f—A. i prceuav so; but 1 do not.remembcr, m y PACIFIC RAILWAY COMMIHSIO*.' CONDI'nON OF KANSAS I'ACIPIC WUEM BOUGHT BV WITNESS. tf. When yoa made 'hat purchase, n-hat was the conditlou at tlia KmiBiig rucifio property, generally — I nieati ita Hiiancial ooriditioa T— A. The f^eueral conditiou was bad ; it bad been budly fiuuucvd : mi,. whilu it was aii immeDSely valuable property iutriiietcally, it biid been nu biLilly managed that it got clear down in the rut. Q. Everything waa orerdiie, was it not? — A. I do nut kiiowalKiul its being overdn«. Q. Were not all the mortgages in default when you first Uegau to buy the stamped incomes T — A. I think they paid the Interual on the lirNt underlying bonds; but I will not be snre about that. Q. Were they paying the interest on the I>enver Extension bonds ' A. 1 will not bo sure about that. Q, Do you not know that those bonds were in foreclosure 1— A. 1 Uiiuk they did commenc-o to foreclose, and we funded the iutere»t aJto- wards. of iu- (Latest that finally became funded! — A. No; I do not. Q. Do you not know that it was over $4,000, QUO f — A. I presiuncw). (J. What was the credit of the ro!\(l at this time, when you liret be- gan to buy thu staiui)ed incomes! — A. The credit waa poor, of coune. or the bonds would not be selling at those prices. Q. Do you remember what security the stamped income boudH Uud f— A. It waa a mortgage on the Eastern Division of the road. sidi»g in Kuropvt *. Jio, sir; unless they »old them through brokers here, and I did in lOIK it. JAY GOULD. 465 \ NEGOTIATIONS WITH AMSTEBDAM PEOPLE. Q. Bat you had no direct negotiation tlirongh people in Frankfort, people abroad t — A. Yes, sir ; I bad negotiations with some Amster- m people. When I was in Europe, I got word that the Amsterdam ople woold sell ont. I had not much time, but I thought I would go Amsterdam, and I supposed they would take a day or two smoking fore they would make up their minds whether they would sell or not, d it would take more time than I had. Finally, I went over there d saw them. I got in there in the morning at 10 o^clock, and washed id got my breakfast, and let them know that I was there, and they St me at 11 o'clock, and 12 o'clock I bought them out and paid them. Q. What was it that you bought from them t — A. I bought, I think, [,000,000 of Denver Pacific bonds, $1,500,000 or $2,000,000 of them. Q. What month was this in t — A. It must have been in 1879; I went iroad in June, and perhaps it was in July t)r August, 1879. Q. Do your books show that transaction t — A. I think so. Q. Did they have any of the Kansas Pacific stock?— A. I think not. ), they just had these bonds. Q. Axe these Denver Pacific bonds the same thing that were called sDenver Pacific Extension bonds t — A. No; the Denver Pacific mort- em is a mortgage on the road from Gheyenne to Denver. Commissioner Andebson. There was but one mortgage on the road, ' remember right, between Denver and Cheyenne. ?he Witness. That was all. k)mmissioner Anderson. That was about $2,500,000? ?he Witness. Yes, sir. i. Were these Denver Pacific bonds included in the exchange made consolidated bonds? — ^A. Yes, sir; they were exchanged. 2. Do you remember the rate paid by you for the $2,000,000 of them t you bought in Amsterdam t— A. I think I paid 80 for them. By Gommissioner Littler : ^ How much f — A. Eighty, I think, or about that. By Commissioner Anderson : 2* Who was interested in this purchase with you, or became inter- Dd i^terwardst— A. I do not know that anybody was. 2* Did you not sell a portion of these bonds to Mr. Sage afterwards f — I do not know but I did. 2. Do you remember selling him $353,000 of them on the 9th of >tember, at 74 1 — A. Perhaps so. Then that was the price I paid for >m. )• If that is the price Mr. Sage got them at, that is the same price \t you paid t — ^A. That is the same price, and I must have let him ire some. Yes, sir ; 74. J. Did these Amsterdam people have any of the Denver Pacific ek t — ^A. No, sir. i. So that the transaction there simply embraced about $2,000,000 those bonds t — ^A. Yes, sir. J. Which you bought at about 74, or whatever price your books will )w t — ^A. Yes, sir ; there was $4,000,000 of the Denver Pacific stock, 1 $3,000,000 was owned by the Kansas Pacific, and the other $1,000,000 wned. ^ Can you state to us what your interest was in the bonds of the insas Pacific at the time of the consolidation, stating it either in the 30 F B Htiiti U. S. PACinr RAILWAY COMMISSION. ongiuul iiiirtibHMt>, ur utampeti ur iui!jUrii)>uonOs, aiul tliuutUere; ur Htiitiug it in tLe i^unRolMiit^^tl butidM into nliicb tlii^y liiul been niu. verted! — A. I tbiuk, sit tliu tiate ot tU« coDsoliilatiuti, all tbia funiUng Iiiul been (;ousmutiiute(l, uml tbat uij- interest: rejirvacatud su maDjcoii' fiolinds. tj. All tlioHe bad Ihivu cxebanged lor consolidated iKiiuIaT— A. Ym, sir. INTKRKST IN KANSAS PACIl-'IC, AND PAINT JOSHI'H AND ttTSBTEBK. Q. And your iut(^re:^t in tbu Kansim Paci&<^i, at tlto time of tlie con- soUdatioD, waa rt;i>n;8cnted by tbe 8(>,(H>0 sbarcH of ball' Ktuck, autl tif tbo bunds to wliieli 1 liavc i-eferredT — A. Yes, sir, of wbieb I will givi tbe aiuount. Q. At tbia tiuie— I refer now to tbe years 1S7S and 1879— iu wlmt otber roadH couiicuting witb eitber tlie Kausua Pacillc or tbe Uiiiou Pacific bad you any iutei'cst T — A. 1 bad an intureiit first in tlie tjabit .rosepb and Western road, wbicb runs from Baiut Josopb to Gmi Island. Q. Now 7 — A. Yf^H, sir; wc found that tbe road» ranniag east from Oiualiji wi'iT I'diiiiiiiiiti^' lii^'ot.bor to force the IJniou Pacillc to pro rM«, Yuii si-c this iIi'i^i^uikI inili'^ woH really called 2,(100 milen; and it vati. vital thin;,' tu tlir ['num Taeillu to Bustaiu itself. Tbe losvaroaJsuitD- biiied to loriie tbe Uuion i'acille to i»ro rate, and Ibcy would bavediwt it if wo had not got uuolber outlet, ho tbat wo hit lUu llauaibul ui' Saint dosepb niid tbo Wabasb — these Southern roadii. Tbat winvbf the Saint Joseph was important to tbe Union Piiciflc. I bouglit inlft these bonds, and tbou 1 built the roatl from Gram! islaud dowo. (J. I*t ns know about your first purebaseH, when they lirst toot plaee. — A. I bavo got an iieconnt, 1 giie«a, whieh will show yoo thai. Mr. JouN F. DiLT.ON. That is it. Saint .loseph arid I>enverCiyf, is called. The Witness. Y"eH, sir; I tb ink this cmbraceo it. Anil ttii-R' ara the Saint Josejdi bridge bonds and stoek. Uommissioner Andkisbon. Wo will tJtke the Saint Joseiib ami Den-- TOr first. The Witness. There are Ibe i-eceivcr'a eertifiesitcs. Those pnpM* that we are giving you now embriiee tbe wholo of that bytttem. Tliere wan, first, the bridge, and then there were two diviaious of that rami, and then there was tbe road 1 built there. That cinbmcea the ffUI« thing. Q. I will ask yon tbo details. Tbo first pnper you band m« w hoaded " Saint Joseph and Denvor liailroatl first morrgiigo IwikI"." Do I understand by that that yon refer to iKtmlw on tbo Saint Jiwciili and Denver, wbicb was the portion of the niilioad in qneslion betwwu Klwood and Mnrysvillel— A, I think Itreattli<^m tbfre without sep* riitiiij,Mlierii. I gne«a I (i-eated it (ill here iis tbe same tliinif— th6 >:;isli-rri and ^Vt-Meni Divisions. (J, Hatiit Josepii 11111I Denver, then, is the whoIo road from Eluwi 3 lliislingnf — A. Yms, sir. JAY GOULD. 467 Q. Of which the Saint Joseph and Pacific was the Eastern Division f •A. Tea^Bir. Q. And the Kansas and Nebraska was the Western Division ? — A. B8, sir. Mr. John F. Dillon. I will tell you how it comes about : It was town here by Mr. Hassler that in 1877 they consolidated and became 16 ^int Joseph and Western. So that it wiis the Saint Joseph and Western. The 3aint Joseph and Denver was the original name, and ley got it mixed. Q. Do I understand you to say that you had no transactions in these >nds prior to January 14, 1879? — A. That is the first, I think. Yes, r, this represents the parties I bought them of, and that is the amount, jd this is the price. Q. My question is whether you had had any transactions prior to Ukuary 14, 1879t — A. No, I think not — no, that embraces all my ansactions in those securities. Q. From what book is this statement taken? — A. Taken ft'om my Nurnal. Q. By whom was it taken f — A.. By Mr. Mink, or my book-keeper — [r. Philips, my book-keeper. Q. Was it done today f — A. I gave Mr. Mink and Mr. Philips my ooks yesterday, and they did it yesterday. You sui)ervised it, did on not, Mr. Mink ? Mr. Mink. I supervised it. Commissioner Anderson. So that the total amount of this purchase etween January 14, 1879, and November 3, 1879, is $1,562,886.98. The Witness. Those were sold out. Q. Yes, sir ; and I will come to this in a minute. They were bought t; 40, with the exception of two transactions of small amounts, which ipear to have been bought at 35 and 37^, and the total cost of the mds was $603,204.78. Is that correct? — A. Yes, sir; that is a cor- ct account. Commissioner Littler. I su^^gest that the whole account be put in e record. Commissioner Anderson. Undoubtedl}', it should go in. The following is a copy of the accounts presented by the witness : Saint Joseph and Denrtr Railroad first-mortgage bonds, yn, \ Bought of Bonds. a. 14. Alfred MitcheU $13, 500 00, at 40 *5,400 00 26. II. A. Johnson 193,500 00, at 40 77,400 00 26. Geoge J. Forrest 93, 200 00, at 40 37,280 00 b. 19. New York Gaarantee Company .... i)6, 461 30, at 40 38, 584 51 b.27. MereantUe Trust Company 96,(500 00, at 40 38,640 00 27. Mercantile Trust Company 17, 000 00, at 40 6, 800 00 24. H. II. Butterworth 42,200 00, at 40 10,880 00 28. 8. C. Vamnm 80O00,at40 320 00 28. A. n. Jackson 162,750 00, at 40 65,100 00 5h. 1. H. H. Butterworth 17,700 00, at 40 7,080 00 1. H. H. Butterworth 200 00, at 40 80 00 1. Hassler&Co 95,000 00, at 46: 10,000 00 1. H. H. Butterworth 4,300 00, at 40 1,720 00 3. Delonne Knowiton 3,800 00, at 40 1,520 00 3. H. H. Butterworth 16,800 00, at 40 6,720 00 7. Delonne Knowiton 4,000 00, at 40 1,600 00 8, Hassler & Co 50,000 00, at 40 20,000 00 10. Delorme Knowiton 6,700 00,at40 2,680 00 10. J. Alden G^lorcl 2,280 00,at40 918 00 13. Hassler A Cfo 61,200 00, at 40 84,480 00 U. S. PACIFIC EAILWAV COMMISStON. mt. BoagUt of Boodi. Moh, !■>. Alfred Mitcliell STa.OSTi OM.al'llt ^Pl.mtS ■M. MercuutileTrnstCniniiiiiif 100 00,Bt40 400O Aiil, 1. John 8.Tilney 3,400 00,«l»7t l.aTaM 7. U.I. Haar 11,300 00, ftt 40 1,S60 H Foil, 26, H. I. Hnar 8,500 00, at 35 S,9n(| afi. U. H. Bulterworlh BO, 000 00,»t40 90,0(10 H Apl. i!8. M. Vault Stock Exchange »9a,0O0 00. at 40 1Q9,!I)UN "-- ^. WIlllniD Balden [Betllomont] 113,60000, 84,00001 Total liomlB I,5fi2,ae6 98 GO3,!04n 1879. Said to UoDdi. Mcb. 13. Ku88CllBngo #100,000 00, at 40 $40, Apl. 17. HiiMoIl Sago 105,000 00, nt 40 49.OO0M 2a F. h.Amnu 100,000 OO.iit40 io.mv May 13, Sidney Dillon 300,000 00, at 40 M.UOilin JiinnlT. S. n.H. Clork 18,000 00, at 40 4,80001 38. Kiron.Bakor 40, 000 00, at 40 l(t,OO0A 30. r. Oordon Dexter :)0, 000 00, at 40 I^OOSm July 2. ICIiaba AtkinH :)0,000 00, at 40 KOOta Totnl (',17,000 00 "wMOO« ISM. Jnii.-J4. Duiaiiceot liumlo on liunil 945,690 08, oast 35«,4llm Jnii. '24. Surreodereil tO&fl, 779 TO iu ubovo bnuds and acriu in oiohiuige for 9,W8 share* of O. P. at par !XK!,mA) .^iift Jairph attd DaMver BailrMi tlook. ISTR. Hliftno. Vel>, 27. To tbo Mercnntilo Trnsl Coin pan; K\ 17. To tlie Mercantile Tmat Company 83 !J7. To H. H. Butterworth 336 as. ToS.C.Bnrnnm 7 aa Top. A. It.JaokBon 1,417 Mi:li. 1. To n. H. Bntterworth 71) 1. ToH.n.Battemortta 1 1. To HasBler *. Co IIM 1. To H. H. Butterwortli 37 3. To Deloniie Knowiton 34 3, Toll. H. ButterwoHh 103 7. To Delonne Knowltou 18 H. TonaBBier& Co 3O0 10. To Deloraie Knowlton 34 10. To J. Aldon Qaylord U 12. ToIIaanIerACo..^ 1,240 18. To Alfred Mitchell 374 Jan. M. To H.A.Johnson J at!. ToGeorRC J, Fonoet > 2, lOB Mob. 19. Ton. Y. Guarantee Co } Apl. 7. ToH. J. Haar 30 Nciv. 3, ToWilliamBcklonA-Co 2.0I.'i 8,810 McL. 13. By Rusnell Snga 474 27. By Bossell Sago I Apl. 22. By EiisHOll Sage 47G Vi. ByF.L.Ames 475 r ir.. By Sidney union IMM "■.. By Eiral'. Baker 190 . Uy Elisha Atkins 142 . Bv r. Gordon Deiter 142 Biff. By Haar sale 400 11,(0 JAY GOULD. 469 2. By S. H. H. Clark 57 a By Hallgarten & Co 500 ^10,625 00 Total Balance of shares oii hand 5,013 84. Sarrendered tho above shares lu exchange for 1,002 shares of Union Pacific, at par $100,200 00 Saint Jo$eph Bridge Builditig Company's bonds and stock. DONDS. fl9. Bought of Bonds. ii26. Angnst Rutteu $120, 000, at 75 $iK),000 00 r a August Batten 170,000, at75 ^.... 127,500 00 8. Angnst Rutten 356,000, at 75 267,000 00 14. Angnst Rntten 24, 000, at 75, less two coupons, |70 . 17, 930 00 15. August Rutten 15,000, at 75 11,250 09 20. Amy 4& Co. 99,000, at75 73,260 00 Total 784,000 586,940 00 Less sales: r79. Sold to BoDdo. 15. RnssellSage $50,000, at 75 $37,500 00 . 1. Sidney DiUon 100,000, at 75 75,000 00 Total 150,000 112,500 00 £0. .24. Balance of bonds on hand. $634,000 $474,440 00 STOCK. m. e20. Purchased 4,000 shares of stock for $6,000 00 Total cost of $634,000 bonds and 4,000 shares of stock 480, 440 00 380. « 24. Received in exchange for the above 6,340 shares of Union Pacific stock, at par $634,000 00 Saint Joseph and Denver Pacific JRailroad^Receiver's certificates, 379. le 12. To n. A. Johnson 9 certificates and coupons $9,450 00 16. To Cbas. B. Alexander ^. 1 certificate 1,000 00 27. ToH. L. Brown A Sons 1 certificate 1,000 00 y 1. To Sundry persons 14 certificates 14,150 00 9. To Eountze Bros 2 certificates and coupons 2, 100 00 14. ToL S. Lemon 3 certificates 3,000 00 21. To L H. Sturtevant 2 certificates 2,000 00 30. To Donell, Lawson & Co 6 certificates 6,000 00 31. To Wood &Davis 1 certificate 1,000 00 t. a To W. B. Colgate & Co 3 certificates 3,000 00 . 6. To Geo. DeForrest 1? certificates and coupons .... 12, 903 33 16. ToR. M. Raven 5 certificates and coupons 5,091 67 C9 60, 695 00 «0. . 24. Surrendered the above in exchange for 590 shares of Union Pa- cific, at par $59,000 00 2. The sales which yoa made daring the same period are stated at foot of this account! — A. Yes, sir. }. I notice that these sales are made to Mr. Sage, Mr. Ames, Mr. Dil- , Mr. Clark, Mr. Baker, Mr. Dexter, and Mr. Atkins ; were these geu* nen all, with the exception of Mr. Clark, directors of the XJoiiHlFa- d!— A. I think they were ^U directors. II. S. I'ACIKIC BAILWAV COMMJSSIUN. Q, Wt^ro thuno t^vuth-umt iiituresteil wllli yuii in ttici luiit^Uiwo at Um tiuiu it WU8 iiDuUsor roa[> of tbc Saiiit JufMijili |m)|i ertien, I see I ninitlvd to givuyou tliv IhiNtiiigu anil Umud lalauil. Vou might kce{i them all iu attroap. By Committsioner Anderson : Question. That is, the ITn»tingHa[id Oraud Inland bonds, is it I— An- Hwer. YeB, BJr; and in partial answer to one of your iuijutrivH about my intercHt, 1 gave you the sto;:k.s on the date of the eou8olhlHtion,biit iwi the bouiln. I tind that I had 2,6G1 of the Kauaas Pacific CoiiHoHilatHl 0 ]K!r cent. boudH, and |il,tiUO,OUU of the Uuiou Pacilic eollatero) U'»it the (lato of the cousolrdittion. I will put that iu altio, Tbo following is a eopy of the tleeotint: tlatllngs and Gramt ItlaitH Jtailr^ad Cotulmetion. JunoitO. Uniuu Paoinu ailvnuors ,. July ill. Union Pucillo Kilvunovs AuK.:it. tlnioD Ttuiillc jKlvouoos Dec. 31. Union Puciflo advanoea IHaO. Jnn. a. Paid Wi I lima Hon d for WTvicoH a. (oconulyof Uull bonilM 13. Puieuvi'r vtmti- IWH, I And a number of sales of (fI17,000 of thesn boiida to Kliiurx. Sage. Ames, Dillon, Clark, Baker, Dexter, and Atkins; do yon knnv whctner the gentlemen last named retained their bonds uulil (Ley wfm di)«|H>sed of iu couneetiou with those wbieh you held yourself!— A. 1 Htippose 80, because we bought them for a purpose, and I do not thinli ihey would have parted with them. Q. I mean they were all disposed of by the same tran8aetioii, wfcldi we will come to later on T — A. Yes, sir; I think so. Q. At (he time the lalter-nanied gentlemen voted fur the coniMliilit- liim, ihiy were the owners of these bonds of the Saint Josppli «Dil " ivir^ — \. I (tiippose so: I think I should correct that : I jii'Maffln le bymla wwc sold ; tUey were at tlte lime of the coDTOlidation Utt ■l JAY GOULD. 471 property of tbe Kansas Pacific; the way the cousolidation took plaoe was this — those properties were all sold to the Kansas Pacific. Commissioner Anderson. I know; I will come to that transaction later on. The Witness. Bo that if tliey had theirs at the time they probably went in with my sale to the Kansas Pacific. Q. They were held by them, and included in the transaction which >'oa made with the Kansas Pacific ? — A. I presume so ; yes, sir. Q. The details of that 1 will ask you about at a later i)eriod ; you bave handed me a list of purchased stock of the Saint Joseph and Den- ver amounting to 8,819 shares of stock, was this stock purchased sub- stantially from the same people who sold you the l)onds? — A. The names will show; I presume so; they were called "trimmings," I be- lieve, and went in with it. Gommissioner Andebson. I find no prices mentioned opposite the stock. The Witness. They went with the bonds, I think, except some of the lots down at the bottom there. Q. I find a second column on the same paper, apparently stating de- liveries of stock by you to Messrs. Sage, Ames, Dillon, Baker, Atkins, uid Dexter ; were these the shares that you delivered with the bonds that you soldt — A. That would be their relative proportion that went Mrith the bonds. Q. So that there was no price made separate for the shares as dis- tinguished from the price fixed to the purchase of the bonds t — A. No, su*; I sold them to them just as I bought them. Q. I find a transaction in the apparent sales of your stock of the date )f October 27, i)ar sales, 400 shares, with the amount carried out $11,650; •rill you please explain that! — A. That is probably a lot of stock I sold in the market; they seemed to have become gilt-edged, and I suppose [ sold a little for hotel bills. Q. Doyouremeraber the transaction! — A. I only remember it as 1 saw it on my books ; I presume the stock ran up ; 1 thought it was pretty ^igh, and, as long as I kept a majority, it accomplished my i>urpose. Q. Do you remember whether this transaction was connected with my other transaction or exchange of securities ? — A. Ko ; it must have )een sold in the open market. Q. Through what broker! — A. It seems to have been sold to Mr. laar and Ilalgarten & Go. Q. Those are separate transactions, one the Uaar sale, and the other lalgarten & Go. sale? — A. Yes, sir; you know along about that time he securities ran up pretty high. Q. In regard to these shares of stock held by the gentlemen whose lames I have given, do you know whether they were retained by them ntil the subsequent transaction which you made with the Kansas Pa- ifle, and were included in that transaction ? — A. I presume so. SAINT JOSEPH BRIDGE BONDS. Q. Yon have handed me a statement of purchases of Saint Joseph bridge bonds, commencing April 25, 1879, and ending May 20, 1879, rom which it appears that you bought $781,000 of the bondjt all but a mall lot from August Huttan, for which you paid $580,040 — were these Jl purebased as one transaction ? — A. All one. Q. And the price was 75 T — A. Yes, sir. Q. It appears from this statement that you ^\(l a ^\\\^\i ^t ^3&k»^ V. 8. PACIWC RAILWAY COMMLssluV. hfjiiiU, $3U,0U0, to UiiHKell Haeo,ofi tite 15th tliiyof UcUtbt-r, IHTtI, noil trUOjOUU to Sitlney Dillon, oti t1i» Ist of Nuri-mbtir, 1»7». at tliniiaiw \>T\ev, 1!) ; do yoa rocolltnit timt trftiDuic-tion, tbcit yon hoIiI tbom ihm Itoiiddf— A. Veit, nlr. _tj. Do you know whetlicr llioy held them until the tranBaistJoB tbi4 you Bubni-fiiivntly ma(I« with the Kauuts Pacific T — A. Yea, mr ; I tbiik thoy dill. 4j. Tliuu your sUiti-uicut coutaiiiH n purvbaHe of the '1,(H)0 ithftreii u| tht! Htock of the bridge for (6,000 ; do yon ramBmber tuat tTanitactionI — A. I do not particulurly remember it. Q, It wan one truunaction ! — A. Oh, ye«, sir. (J Aud tbo price, tliongb not stated here, would be 4L5(I a Hhaiel— A. Yea, mr. Q. Did you keep all that Htock until the Irannaction that you bid Kubttecinontly with the Kanmis Pacific! — A. Yes, air; tlint etocli In. time would bcoome good from tbo earnings of the bridyo. tj. Yon Aold it to the KanHas Pa4:itlc two months atier you sold iha bonds lo Mr. SnRe ! — A. Yes,Hir; I tbiuk I gave tbo TJniou Paoflotlit Ktook. Q. Yee, m- ; you did, to tbo Kansiis Pacific or Union Pacific, whld. ever it wa*(. Uow did you come to own the Saint Joseph receiver^ certlfl. cutCttT — A. 1 do not know whether! took them of Mr. Bond or not Kr. liond WHS the receiver, and I guess be bad placed tliem with some iitiU' Ititiou, and when I got interested in it I took them up. Commissioner ANDURtjOH. Tbe statement banded me shown liidr re- ceipt from a number of different parties. The Witness. Yes, sir ; I must have taken tlivm up from the partia who had advanced on them. Q. Are tbo figures given iu the column the ruecaruetbe owner of the ct^rtificiitcs, the stofk, and bonds. (J. When von HMy llml .vm l>ui!l I he toad, do you mean you, indirhln- atlyt— A. I built it iiidlvidiuill.v. (j. Making a conlrui-t with ivboni f — A. With the Hastings ami Gmod Island (Company. "VNION PACIFIC ADVANCES." Q. The entry here is "Union Pacific advances}" what is the incantnj of that form of entry I — A. The Union Piuiitic advanced a portion of Iba money out there, ami tbeu would draw on nie for convenience ia con- structing It, As the contractor was out there on the spot, I autUorizeil tbeni to make these advaiuH's as the road went on, ami dniw on mc^r tbo advances. Q. Whiit form of paperdid you get to represent these advances; vtn, it morelj' a receipl lor money, or was it a bond f — A. I got the IwiHb am) vtot'k of the mtlroad. JAY QOULD 473 ^ Is the amount of the bonds and stock you got represented by the «1 of lUhis acconnt which yon band me ? — A. Yes, sir; that represents tactual cost. '^ 3. Then the four items which are marked <^ Union Pacific advances'^ present actnal payments made by the Union Pacific for your accountt — For my acconnt ; yes, sir. ^ In the construction of this road f — A. Yes, sir. Q. These four payments commence June 30 and end December 31; kS the whole road constructed in that time f — A. Yes, sir. Q. Was your contract with the corporation in writing ? — A. I sup- 86 so: yes. Q. "Wliat is the total issue of bonds of the road f — A. I think it was 76,000. Q. How does it happen if, under your construction contract you were receive all the bonds of the road, that the amount of the advances tre is not the same as the amount represented by the bonds ?— A. dcaose, if you divide one by the other, it would give you what the mds cost me. Divide the cost of the road by the amount of bonds I ceived, and that would show what the bonds cost me per thousand. Q. Then the figures that are handed to me do not represent the face klae of the bonds, but the actual cost of the road ? — A. The cash cost ' the bonds. Q. The cash cost of the bonds and the amount which was paid by the nion Pacific for your account. — A. Some of the items were paid by the nion Pacific — those that are designated. Q. To whom did the Union Pacific pay this money for your account? — . They paid it to the contractors. * Q. What is the name ? — A. I do not remember now. I was the con- sictor. Q. Did you employ certain persons to do the actual work of the grad- g of the ToaA and laying the track and buying the iron ; who did lat work for you f — A. I do not remember now who, but I think it was !r. Collins. Q. Was it not Mr. Bond f — A. No ; I am not sure. Commissioner Anderson. Mr. Bond appears in the statement you Ave handed me as receiving $25,000 for services. The Witness. I gave you these as all a part of the same transaction. 1 settling up with him for his receivership of the two eastern roads I aid him these $25,000 for his services as receiver. Q. 80 that it was all entered in the cost of the Hastings and Grand ilaadt — A. And I charged it up in that account, as the three roads ere immediately consolidated — this road and the other. I paid it in lat acconnt. Q. It did not make any difference, then, in which account it was en- jred! — ^A. l!^o, sir. Q. Please tell me whether your statement is that, while you do not ^member the name of the contractor, the items charged against you as Ivances represent the actual payment of ca^h made by the Union Pa- fie Company for your account to the person who did the work ! — A. 68, sir ; that is it. Q. And yonr reimbursement from the Hastings and Grand Island >mpany was effected^ by the issue of all their bonds and all their )ckt — ^A. Three hundred and seventy -five thousand dollars of first- >rtgage bonds and four thousand shares of stock. ^. So that in order to arrive at a correct statement of the cost of ,474 r. f. PACIFIC riAlLWAV COMMISSION. tbe«u buntlH to yoa we bavn $.375,000 ul tmndti, trbldi tinH f ::an,i^.3B> Hint in correct, is itt — A. Ves, hit. Q. W«{;ariling tlio stock, then, as iiilditioiml or as tbrown iiil— A. Yl'8, BIT. Q. You Htat« member wliitt 1 liclil <'n tlie let of Jjinuary, 1870. g. WliiiL.li.i w.M liiil.loii Ihu lat o( January, 1S7!) ;— A. I hcM one hundred iimi weveiily Ibousand Hliares. <}, And alter tliiit you mwle this sale to the syndieatx^t — A. After tliiit 1 made that «ale to the syndicate. i}. Do yon not remember thoapproximBtoamounlT — A. I masthsTt reduced iity interest, you nee, iVoni that time down 1o Ibc Int of Jag. nary, 1880, down to twenty-seven thousand ahar«s. Q, Do yon know whether you appear on the books of tlic Unh» Ffr. cillo Railroad on the Ist of tfaiiuary, 1880, or I wfll siiy on tlie SOth gfi^ January, 1880, as a holder of any shares or stock of the Union Paciflol.^ A. J think not. They had « law in Miissiielnirtetls by which any Fnwi Netting up a claim, whether there was imylliitig lo it or not, (h>iiIiI attMk Ilie entire stock and give an immense deMJ of tn)nble; and I fnniill about this law, so tliat I transferred my slw^k out of my name. (J, Did your holdings in llio Union I'aciHe Kailway not appear m your leilger immediately after tlioconaolidationl — A. 1 think (key did; very likely. li. Was the law chaTiged iiotween the 1st o( January, ISwO, niitl the 1st of Febrnar>-, ISSDf— A. No, 1 think not. lint that was tbe rvesoi I put the «to(;k ont, I haeoulati\'« stocks. (iONVBRSION OP SKCUBITISS JNTO UNION I'AOIl'lG UAILWAY MTOOfc IJy Commissioner AndkKson : (j. You did convert, at the perioil of oonsolidation, all of your Rim- sas Pactliu and all yonr interests in the ir»ion Pacific Itaiirnnd nlock, that were entitled to conversion, into the stoek of tJie new compnnyt— A. I converted twenty-seven thousand! shanss of the Union I'aeiBc stock. Q. All of the Btook that yon did convert, then, appears on your ledgv AS your stock! — A, I do not know about thai; but that was wball iirtually ownetl. (j. 1 Inind you a statement furnished me by the company, and uk you to examine the same, as showing the interest which yon ' '' With in the Union Pacific B.aiV'Ka^-, JAY GOULD. 475 te WrrwBSS. The new company t »mtnissioner Akdebson. Yes. le Witness. I do not know that I understand this. Yon do not 3nd to say that this was all my own t ^mmissiouer Andebson. So I understand from Mr. Mink. [r. Mink explained the account to the witness.) le WiTiTESS. I do not know anything about this; I gave yon the it amount that I did own. . The only question is whether that t wenty-se ven thousand of Union flc Railroad stock may not have been sold by you between the Ist anuarv and the 24th of January. — A. No ; I had tliat on the 24th. . In whose name did it stand t — A. 1 think twelve thousand shares ) in Mr. Dillon's name, and I guess the rest in Mr. Morosini^; lably so ; I do not know. . When Mr. Morosini converted the balance which stood in bis e, do you know whether the new stock was taken out in his namef — [ do not know how that was. . You do not know how that was f — A. No ; I do not remember. . Do yon remember whether the twelve thousand shares held by Sidney Dillon were converted by him in the name of Mr. Jay Id or in the name of Sidney Dillon t~ A. I do not know ; I do not dmber; I held' the cortiiicates, of course; they were in my posses- ; they were in his name. . Indorsed in blank on the back t — A. Yes, sir. . Apart from that interest in the Union Pacific, does the paper which w show yon correctly state the initial interest which you had in the on Pacific Hallway Company immediately after the consolidation t tderstand it to be a transcript from the ledger of the company. — ^A. n only say as to this first amount. I presume that is oorrect Then d 27,000 shares of Union Pacific. . Which does not appear in the account? — A. Which does not seem ppear here. Then in making sundry sales here, which will develop, seived pay in stock, so that I had that amount. . iliat amount was 32,000 and how many shares f — A. It appears ) 32,960 shares. . That was the net amount after the thing was settled ? — A. I pre- e that is right ; so that I had 72,000 and 27,000. That would be 00 shares at the date of the consolidation. 1. Of the new stock ? — A. Yes, sir. ommissioner Anderson. Of which 73,342 were derived as follows : i82[ through the conversion of the Kansas Pacific stock, and 32,960 Q the transactions which you have alluded to, and which, on this ac- at, are entered as being the proceeds of Denver Pacific stock. I lot charge you with those wottls, " Denver Pacific,'' but they are so ireA on the books of the company. ''LESS EGGS IN ONE BASKET." ke Witness. I do not know about that; I never saw them before i. Does this statement which I hand you^ which is marked ^^Tran- pt flrom the ledger," show correctly the disposition made by you of I; stock — I mean the periods of sales — it appearing between the 7th i'ebruary and the 15th of March following that you had sold all of t stock except about 16,000 shares f — A. I do not know whether this lorrect or not. It is undoubtedly correct as for as the transfers oft Vnion P^olAo Inwfe:^ nre coocerued, but tUat wo\v\^wX^^«a5 ^aWl^ F 476 U. S. PACIflC RAILWAY COMMISSION. riou of my sales. ThoEoI can give yon. I cauouly say, generally, tint I had made up my mitirt after the deciaion of the Suin-enie Court, on the Tliurman bill, that it would be perhaps better for thia proiwrty In have the stock widely distributed ; to have four thousand or live tboiissnil slock'liolders that would do a little of the " walking " instead of one; ami 1 assumed that i>olJcy steadily, thinking it waa better for the property. I thongbt it was better for me to have less eggs Jo one basket. I tliiDk that explains to yon the whole of these accounts when yon get tbem, Commissioner Anderson, The only point I call your atteution to is that that desire on your part appears to have been very macb stlmo- lated immediately after the consolidation. The Witness. It waa stimulated because the effect of the consolida- tioQ was to make a very large advance in the stock, and it enabled me to carry out a long-formed resolation. The effect of the conaolidatwn waa to put the stocks up about 30 points. There was not enough to go around. Q. 1 notice that there are three sales here of 20,000 shares eaeb ; one t

«k ^(^\\ bUic^ fot such au in^-estiga- JAY GOUtt). 477 ion, aud they had no interest in the Kansas Pacific and very little in be Union Pacific. Q. Was Mr. Humphreys a member of the board!— A. They were K>th members of the board. Q. The board of what company! — A, Of the Union Pacific. Gen- eral Dodge had been the engineer that was selected by the Government o make the location of the road originally, and had been familiar with t from the start ; and General Grant, in speaking to me of him, said le was one of the best engineers and the best railroad man that he had )V6r seen. He had had him during the war. We selected him. Then tfr. Humphreys was a man who had had a very large experience in the ^est. He had lived in Saint Louis and was conversant with both of iiese properties. We selected them as two disiuterested men to tell us rbat would be a fair consolidation, and they went to work and made iieir researches. While the researches were going on my interest {banged. From being in favor of the consolidation I bought the Mis- lonri Pacific. In order to protect the Kansas Pacific 1 bought the dissouri Pacific, and my interest had changed. MISSOURI PACIFIC. Q. When did you buy the Missouri Pacific? — A. I bought the Mis- iouri Pacific in Noveml)er. Q. November, 1879 ?— A. 1879. Q, From Commodore Garrison t — A. From Commodore Garrison. Mr. JoHK F. Dillon. I would like to have you fix that exact date, if yon can, when you bought of Commodore Garrison. The Witness. I think it was in November, 1879 ; I do not know whether I can fix the exact date. Mr. John F. Dillon. I know the date, but the witness is making a statement under oath. November 13, you mean, subject to any correc- tion, if you find it incorrect. The Witness. Yes, sir; 1 bought the Missouri Pacific on November 13. Q. Where were General Dodge and Mr. Humphreys between October 23, 1879, and January 16, 1880 1— A. I do not know. Q. Did you see them from time to time between these dates ! — A. I may have seen them, but I never had a word of conversation with them about the consolidation. CONOEENING KANSAS PACIFIC CONSOLIDATION. Q, Did you know what they were doing t— A. No, sir. Q. Then when you speak of their researches, how did you know that they made any researches t — A. I presume they did ; they had ample time. Q. You were an active director in the company at this time ? — A. Tesy sir. Q. And would have known as to any extensive examination of ac- counts or reports? — A. No: 1 would not have known about that. The offloes were in Boston and the business was transacted there, and I seldom attended the meetings, unless they were held here ; but I would nol know the extent of their researches. I presume, though, they were devoting time to it. Q. Do you consider that it would have been an easy task to solve the question propounded to them as to what would be equitable terms of eoDsolidation t— ^ Yes, sir ) I should think so. RAILWAY COlOUeSIOK. Q. Woald It not require a vrij acconitat kMwlMlge u( LU« twmian. live viilitcM '^ IIm^m: twr> jiru|MTti<3< ! — A. Yeit, air. Q. AihI of iWir tatrufng cstpftctt; t— A. V««, lir. Q. AinI vf the ezpeoMn in opcraliDg them t — A. Vrs, »ir. Q. Anduf Uttir KBoenl btuwialeiHKliiiuDf — A. Yvtsair; Mid Utrir il. All lime tilings wuabl hvfw to Imi aludiul lutd nruigbi^l gurIuIIt, voold Ukj UOtT — A. Yttt, Mr. Tluil njtuolidatioti hLouUI bv jiidf^ by tbi> value of iIiom! two pru|M.'rtii-B ul llic Ijiim< tlivy wi-ic jiut Ioj^k^ iuid intu tiiat ku euteml tliu quentioD of liuw iunii> mtluM oC road t% liail, liow uuuij' hnathvM Uify uwueU, BDpo yon not think there is any difference between determining just B18 of consolidation representing the rights of stockholders andcred- re, by the tests of the past, and the cases which you cite from your n experience^ which are individual speculations, where a man has*a ht to make his own adventures ? — ^A. Yes ; there is a better test than f of these, and that is the fhture. What was the effM^tof itt There % test that you have not at the time you make it. That is the test a have now got here. Q. I am only inquiring your views as to the duties Mr. Humphreys d Mr. Dodge were called upon to discharge. Do you not think it 18 their business to take the account of those two companies for the e years from 1875 to 1880 and examine them critically with reganl the actual performances of those two roads !<^A. Yes, sir; that is e element. Q. Do yoa know whether that was done by them or nott — A. l^o, I not ; I presume it was. CONCERNING THE LETTER OF HUMPHREYS AND DODGE. Q. Yoa cannot recollect who wrote that letter t — A. Ko, sir. ^. Please read it and see if its language recaUs the composition of it yoor mindt — A. (After reading.) 1 do not know who prepared this ter. ). Who delivered it to Mr. Humphreys or Mr. Dodge ? — A. I do not ow. J. Do you think it was sent by mail or handed to them t — A. I pre- ue it was handed to them, although I do not know. ). Your statement, I understand, to be that although you saw these itlemen from time to time in November and December, you had no iversatton with them whatever relating to the subject they were in- (tigatingf — A. No, sir. i. They made a reiwrt. Do you remember that t — A. 1 think they t. ). Do yoa remember seeing it about the time it was madof — A. I isume I did. I do not remember what time it was made. 2. Please examine the report which I hand you, and which bears ;e the 16th day of January, 1880, and state if you recall seeing that ortand reading it at tUe time? — A. (After reading.) I presume I f it at the time. ). And you doubtless read it when you saw it f — A. Yes, sir. ^ After reading this report, did you have any couv^waXSsyoL ^SSdl 480 U. S. PACIFIC RAILWAY COMiaSSION. either Mr. Humphreys or Mr. Dodge in regard to its contents f — A. Ko, sir ; I do not think I did. Q. Did you think it gave an exhaustive statement of all the oonmd- erations that should have governed in solving this question! — ^A. I do not know that I read the letter, I only glanced at it. Q. Do I understand you to say that the figures for the consolidation had never been discussed between the examiners and yourself, or any of the other directors, to your knowledge, with the examiners f I mean the figures appearing at the end of the report suggesting that the oew company should be constituted as follows: The Union Pacific, with a capital of $36,762,500 ; the capital of the Kansas Pacific to be $10,000,000: the capital of the Denver Pacific to be $4,000,000; making a capital stock of $50,762,500. Those figures were very familiar to you, were they not ? — A. Those represented the stocks of the three roads. Q. Yes, sir ; but it did not follow as a matter of elementary concla- siou that the solution of this question would give absolute parity of in- terest among the three companies as to their stocks. That did not follow, did it? • The Witness. Why not f Commissioner Anderson. Because they might possibly have con- cluded that one company should only have one share of stock for two shares surrendered. The Witness. If they had come to that conclusion they would haTC changed their allotments. Commissioner Anderson. I say the conclusion they came to is pre- cisely the equivalent of the stock of the various companies as they ex- isted before. The Witness. Yes, sir. Q. Was not that suggestion perfectly familiar to you at the time, aad was not that the one that you had thought of! — A. Yes, sir; I had thought of that; but most of the Kansas Pacific stockholders thonght they should have a distribution of the Denver Pacific stock among them- selves, and Q. We will mix these matters up if you go on to other subjects. All I want is the manner of, and the degree of, communication that ensue iinrron'Kniitic rondH. (j. Citn ,viiii tell riK- liow Hicic I'naiiiineift arrivetl at tb« oobcIuioq Hint llii' Irilnii I'lKilii'. i;;iil\vtiv udcr ('OtiM)li(Iation nould tlivn Tfiire- I'd iiiiilnpt'ratfU road of 3.748 miles 1_ A. VvN, Ml'; I iliiul. I iiiii itU .ytmliow Hint was. Tbn Uoion racific,! «niil, wiiM 1,(L><> mU-n. It Im I.ip'l'i mili'H of tli« iiiatii liiir. The Kaiim iSloillv Mil!. TK;t miK'K; tin* iliiiiin I'acitli; hranohcB, TS3 miles; Uin KmntutM t'tu'JIlo braud»-», Sll inik-H. Tlint ninkoH almut 3,500 milm. Cuniiiiiiuuom'r Amikrnon, Tlui't' IIidiiriukI aevon liimtlrc<) and fiirtj- SJX HR' lln' figtirw* iu< (riven. Wo will not Imtlior nlwiit a trifle of m Tb»> \VlTXKS8. Thr Kansas LVntral would |irolmblj- msike that TliU \» Hot in hon>. )l,v (\uuiiiii»iiiiH*r Littles : t^ U that ti |Kitrl of thv Kunms Puiutlc; is it oitu of it« broncheil— A. Y«w,sir: tluit li«-juni« a bratioh by Uic wmBolidiilioii. That wonU imttwt^.v nukkc il u|t. Rv i\i«iBii.'«H'«roi>er fistitnaleof tbo milogtof tbbt n^, fiif tti«< ; ~ ^ tlic luiioiuit of Block per mile, to i«v4«KK> iti<' hmiMrl-i - ' .>'ili('. wlik-li lind tli«ir own stoch «ad N*»»»t*?— A. >> . 'Indo tliiit. V- ViHisawtts:- , Inuichcs. (^SS itiilws. Oo,V'iii''"n )^wc IkM U vnR a Mv^« <»tuudW of the milvugo uf tbis ro:i 1it:ii>'li> wrtW rwM rwMkv *Ucli kad tktr o«D stocks nml bonds T— A \ .. m t if tWj tetl Wv« in lh» tWMy of Ibe Union Pnciftc as an j!<.hii 4 «v«kU V iwftfc I* ^Mteiv ti »s ■iWgfc \t^ IWi wwmM w* HfMBMl tW nork pH Bide of nvid in tlie onll «iWc> «v«Eiv<# » — Ifc* rffart. tfca* m u. all tUt- Uaiii(ih Mmh t«M di t^ «Mi^ ^ Mark f— A. Tbey Uetil .s->:.. )^ Wn»K I «!«* t»«9 ftNM a^^ aa tfc* »tork. In 1Jh> K h nwtft* I MMk *9 ^tM iB iW ta«*> Mt «n tbe atork. tVww^Mil— 1 ACTWaaa^ Tkat fe tW «^ tU» rrpoH vm miulf iiii, WWLir>aiiHfctifciati ■"■*■'' "-IWraM FadSe &si)n]r Coiii]iaay "''""■'■* - - * - - f,i hiIj openttwl , > VMiiwxi iNk Hfwrt «««p j«« in tanr of fli« ' I AS— Jl. Sill. Witt m^ my intntsl liM JAY GOULD. 483 ALARM CAUSED BY WITNESS' BESIGNATION. By Commissioner Anderson : Q. I am coming to your resignation in a moment. I think you would )t along better if you would only answer the questions. My question ^ what communication you had with Mr. Ames, Mr. Dexter, Mr. Sage, id Mr. Dillon, at or about the time this report was received, in regard to [6 consolidation. Was the matter talked over generally t — A. Ko, sir; bad no talk with them until after I had resigned. They became greatly armed. The report got out that I was going to put these roads in iUi the Missouri Pacific and that I was going to build an extension from enver through the Loveland Pass to Ogden, and they came over here «atly alarmed. Q. Who came over here f — A. Mr. Ames, Mr. Dexter, and I think r. Atkins came, and Mr. Dillon. They came to me and said that 1 1(1 been identified with the Union Pacific here, and that I was com- itted to the consolidation, and they lay right down on me to carry it it, though I would have given them a check for $1,000,000 rather than have done it. Q. You did not give them a check for a million dollars ? — A. No, sir ; it I have told them since, repeatedly, that I would give them a million, id they have always had the offer to take it, and put me back. They kve got it to-day. They have got it this minute. If I had taken Mis- nri Pacific stock instead of Unioi Pacific stock, I would have had an aet to-day worth away above par. (j. I do not think you need complain about not having assets enough. )w long have you known Judge John F. Dillon t — A, The result of It talk was that they would not let me go out of the room until I :ned a paper that I would carry that consolidation through. Q. Where is that paper! — A. I suppose it must be in Boston. 3. Have you ever seen it since ? — ^A. No ; but I remember Mr. Dex- • eat right down there, and they would not let me go out of the room til I signed the paper. 3. Do you remember whether that paper was signed before you re- ved this report, dated January IGf— A. I think it was. 3. Do you remember whether it was delivered in the month of Janu- ^f — A. Oh, I will not be sure. I think it was after I resigned. I signed, I think, on the 10th. ACQUAINTANCE WITH JOHN F. DILLON. Q. How long have you known Judge John F. Dillon ! — A. I have own him a good while. [J. How long before the consolidation had you known him t — A. I ink I had known him since about 1878. Mr. John F. Dillon. In 1879 I think I saw you first. The Witness. I met you in 1878. I met you first on the steps of the fth Avenue Hotel, coming down, where Mr. Dillon introduced me. m were on here daring one of your vacations — an intermission in ar term. Mr. John F. Dillon. That was May, 1879. The Witness, Was it May, 1879 1 1 remember the incident. Q. Nothing special occurred between yourself and Judge Dillon in *y. 1879, when you met him at the Fifth Avenue Hotel, in a business iy i It was merely a casual meeting t — A. I think so. Q. When did you first know Judge Dillon in business ? — A. He came I here in the lafterpart of the year 1870. U. S. PACIFIC RAILWAY COMMISSION. Q, Was it in tlie naiue moutli tliut Ihis letter to Mr. UumjititvyH and Mr. Dotlge was writtcu t — A. Tliat I do not romember. Q. Do you remember Mr. Sidney Dillou suggesting to jon that Jiidp Dillon woalil be a very oscellent coaase) for tbe company to have, a tbat be waa here with referouce to a professorship in Oolnmbia Oollei HDtl bis suggesting to yort that bo would bo a good mant — A. It*'' HUggested it to Mr. Dillou myself. (J. You talked about it together ! — A. Yes, nir. Oomniinsioncr Andehson. TliCy contended for tlie honor togollier. The Witness. Yes, sir ; well, they mlgbt, too. tj. Von think you Bnggested it to Mr. Sidney Dilloa t — A. 1 ratb^ claim that honor. tj. You liotb agreed about it entirely t — A. We botb agreed ; yq sir. Mr. John F. Dillon, I want you to say that I never euggestoil The Witness. No. Mr. John F. Dillon. That is all I care for. Q. Immediati^Iy after that Judge Dillon did become the adviser tbe Union Pacific ILailroad T — A. Yes, sir. Q. And bas remained the advisor of its suecossor to this dayT— a Yes, sir. Q. Did yon see bim very frequently bctweeii tbe time he (Jiteml oi his duties and the followiug January t — A. I do uot think I did. Q. Did you see him at all f— %A. 1 may have seen him. Nothing nni recalls Ibat to my miud. Q. Did you have a unmbcr of interviews witii him in regard to Uii> papers that were being prepared fi-om time to time T — A. I do noi tc- member; I might have. Q. Did you see bim in regard to this Icttet that was written tnMr. Ilumphreys and Mr, Dodge T — A. No, I do not think I did. I think ! was out of tbe bo:trd during tbo time tbe oonsotidatton was eflectdl. Commissioner Anderson. But my question nddrcHses Itself to Ui October 23d meeting. The Witness. October 23d was long aller the consolidation. Q. October 23, 1879!— A. I do not think Judge Dillon hurt ever heard of tbe consolidation at that time. Q. You were writing a letter with reference to aa Important Bubjetl, and my question is whether you conferred with Judge Dillon, wliOKW then the adviser of the company, as to what should be done to get fhir terms of consolidation rejmrtcd. The Witness. Is that a letter to Jndgo Dillon ! Commissioner Anderson. No, sir; tbis letter is to Mr. llDiniihrpj;) and Mr. Dodge. The Witness. Very well. Commissioner ANDERSON. I asked you whether you conferred nilt Judge Dillon about writing that letter, or what steps should be Into for the purpose of getting the information you desii'eil. A. No, sir ; I do not remember that I conferred with him. I mmV erod that 1 knew pretty well about it myself, without that. OONOEBNINQ PBEl'ARATION OF ARTICLES OP 0ON8OLIDATI0K. Q. Do you remember the ]irejianxtLon of tbo articles of uonsolldita I — A. No; I did uot pay any attention to the details. Q. They tniist have taken some little time to bo prepared t— A. Ii*, JAY GOULD. 485 }. Do yoa recollect seeiDg Judge Dillou in regard to tbese articles all t — A. I presume I did, but if you will state any particular thing it will call it to my attention I may remember it. J. When you saw Judge Dillon where did you see him ? — A. 1 jirc- le I saw him in his office. J. Where was his office then ? — A. I do not remember now. I have rotten. \. Did you carr^ to him any drafts ip your own handwriting as to the ns of consolidation ! — A. No, sir ; t do not think he had any commu- fiition with me. He did it with the officers of the company, probabjy. Eld ceased to be the power in the Union Pacific. {. I understand that. But nevertheless I want to know, as a mat- of fact, what you did. Do you know that a conveyance of all the perty of the two companies was prepared and executed ou the 24th fanuary, at the meeting of the company ! — A. I presume so. 5. Do you know who prepared that conveyance ? — A. I think Judge Ion, but I am not sure. (. Did you see him in regard to the details required for that pur- se f — A. I presume I saw him in regard to some of the details. !• As a matter of fact, you know that he was engaged on this work ? L, Yes, sir. (. Preparing the papers that would be required to make theconsoli- ion effective f — A. Yes, sir. \. Can 3*ou tell me how long a time he was engaged at that work ? — No, I cannot I. Do you think it was as long as a week ? — ^A. I should think so. [. Do you not recall furnishing Judge Dillon any of the data from Ich he was to draw these articles! Do I understand you correctly ! — I do not remember that I furnished it specifically. I 8upxx)se ho got rom the officers of the company. 5. To whom do you refer by the officers of the company t — A. The rotary and treasurer and the accountants and the president. J. Please give the names. The secretary, Mr. McFarland t — A, Mr. Farland was secretary, and Mr. Mink accountant, I think, and Mr. Ion was president. I. Do you think Mr. Mink would have considered himself authorized tell Judge Dillon who were to be the directors of the new company ? L No, sir ; no ; it would be the president of the company that would e him that information. The president or the executive committee. ). Do you think the president alone would have considered himself horized without conferring with the other gentlemen to give their nest f r. Ames. 1 presume he consulted Mr. Ames. I. Do you know how your name came to be inserted as one of the dctors of the new company ! — A. No, sir. I, Do we understand that it was a matter of surprise to you that you re named as a director in the comx>any t — A. No, sir ; I was asked to in by either Mr. Dillon or Mr. Ames or the executive committee. i. And you consented t — A. Yes, sir. I, Was this on the same occasion when you signed the pai)er, say- that it should go through that you consented to be a director of the apany ? — A. I presume so. It was during the time that the papers re being prepared. }. Who were those gentlemen who urged you to sign this paper, and vrhom you gave it ? Was Mr. Ames one of them I The Witness. Signed which paper ! *48G IL 8. I'ACIt'IC KAILWAY COMMISSION. UuiiiiiiissioiK-T ANUlcitsoN. Tlio [)ii|iitr ynit Iihvi^ rt^R-ni^l to, liy h you a;;roe*'«, JAY GOULD. 487 ;. You say yoa remember Mr. Holmes coming to see you ? — A. I do remember his coming to see ine, but I presume he did. I saw him 0. [. You remember that you saw him? — A. Yes^sir. j. Who was present besides yourself and Mr. Holmes t — A. I do not \w. J. Was Mr. Dillon there? — A. I do not remember; I only remember circumstances connected with that stock and its bearing on the con- dation. GONGBBNING SUIT TO EELEASE DENVER PACIFIC STOCK. j. Do you remember you had a talk with Mr. Holmes in regard to iging a suit ? — A. Yes, sir. |. What did you say to Mr. Holmes ? — A. The question j. Just what you said to Mr. Holmes is the question ; or give the sub- ice of what you said and what questions you asked him ! — A. I think question was this. The question was whether we were to put the iver Pacific stock into the consolidation, or whether we would fore- le the bonds. We held all the bonds, and of course wo could make title, but it was decided that the franchise of the Denver Pacific opany would round out the consolidation ; and while the stock, so to ak, had no intrinsic value, except as it was made by the consolida- I, it yet made it a perfect consolidation ; so that it was desirable to solidate the franchises without foreclosing. There were $4,000,000 itock. I had $1,000,000 of it. We held as trustees $3,000,000— Dty-nine thousand shares. After it was decided \. Do you remember saying all this to Mr. Holmes ? — A. This was conversation which came up. This was the conversation that we . I then said that I. would put in my stock at 10. I had $1,000,000 t. That is just what I had paid for it. I bought it of Arapahoe nty, Colorado. I paid 10 for it. . When had you bought it? How long before? — A. I had bought ily a short time before. Then, in order to get at the value, we made rge value of the trust stock. We called that $500,000, and reduced mortgage that amount. ommissioner Anderson. I call your attention to the fact that I am r asking what you said to Mr. Holmes. he Witness. This all came out in the talk with him. ommissioner Anderson. Your memory is better than his. he Witness. I remember distinctly because I put in my own stock ^hich, if I had kept it, I would have got consolidated stock ; and it (rally refreshed my memory thjit I put it in at 10, and bought it £ a few days atlerwards at par, in payment of these things. Would such a circumstance fix it in your mind ? ommissioner Anderson. Yes, sir ; but that is an experience that I . lid be very glad to go through. lie Witness. To sell at 10 and take back at 100 ? . Tell us what you told Mr. Holmes about that suit I— A. If it was Holmes — I think it was Mr. Vanderpoel, but I will not be sure — I him that if he could get an allowance of $500,000 for that stock, I Id surrender it as a trustee ; if ho could get an order of the court. nsidered that, of course, more than it was worth, but we could take it of the trust; but I refused to do so without submitting it to the :t. I did not know but there might be some question about it. U. 8. PACIFIC BAILWAY COMMISSION. (i- Uii\i5 you given U9 nil of jour coiiverBatlou witU Mr. UoIwm u you reuimuber it!— A. I migbt remember more a« I went ofi. I Ihlutii tiave given tbc substaueo ot it. Q. J>i(l you ask Mr. Ilolmea liowluug it would takefo currjratuitor that character tUroui;ti, 80 as to get a (leercc ! Tbu Witness, A iorcclosureT CominissioiiPr Andekson. No; a decree roleaDiugtbiatitockfromtbe trust. A. No, sir. Q. You (lid not ask biin iiiiytbing about that 1 — A. 1 did not iti]]ipfli'Qpai-ed T— A. 1 pRSUg |b(Ur wore. JAY GOULD. 489 ). Do you know -by whom tliey were prepared ? — A. No, sir ; I do not. J. Were they prepared by Judge Dillon t — A. I do not know. }. Were both the letter and answer prepared by the same person t — I do not know. }. Were they exchanged in the same room ? — A. I do not know about it. BEGABDING MB. DILLON'S LETTEB. i. Where were you when you received Mr. Dillon's letterl — A. I do ; know: I do not remember anything about the modus operandi. }. I will show you the letter, and get you to read it. The answer is the following page [handing papers to witness]. Do you remember .t letter, after reading itf — A. Yes, sir. }. Where were you when you received it f At the office of the com- ly t — A, I do not know whether I received it or Mr. Sage. i. Look at the answer. By whom is it signed ! — A. It is signed by :h of us. It is addressed to both. }. It is signed by you, is it not? — A. I do not know whether the let- was sent to me or Mr. Sage, or to both of us. }. In either event, did you not see the letter before answering it I — Oh, yes, sir j certainly. 2* My question is, who handed that letter to you to read ? — A. I do ; know who handed it to me. 1. Do you notice that the answer to the letter bears the same date as I letter f — A. Yes, sir ; that was a prompt way of doing business, was lOtf 2. Were they not both prepared at the same time! When the letter 8 written, addressed to you, was it not understood what the answer >uld bet— A. I do not so recollect it. J. Do you think that you debated over the matter some time before ting the answer f — A. I think I conferred with Mr. Sage, and proba- we called in Mr. Vanderpoel and submitted the letter to him, and ; of that came the reply ; but that would be only a natural supposi- Q. I do not remember how it was done. That would be my usual y of doing it. J. How soon after the exchange of these letters were you served with I summons and complaint in this suit ? — A. I do not remember. The aplaint will speak for itself. J. It will 5 but we would like to have you speak. Do you remember eiving a snmmous and complaint f — A. I presume so. I do not know It. Holmes called on me, but that I instrqcted him to call on Yander- ?1, Green & Cuming, and very likely he might have sent it to them^ : I do not remember how it was. i. Do yon remember thefact of receiving that complaint to extricate it stock from the trust, before the articles of consolidation were ued ! — A. No; I do not remember. AS TO VEBIFICATION OF ANSWEB. i. Do you remember whether you swore to the answer f — A. I do not member. It ought to tell. i. I will show you the answer. Please look over the answer, and &H,y ether you ever remember seeing it and swearing to it.— A. Yes, sir. i. On what day did you swear to it!— A. The 20th day of January. }. So that the complaint must have been prepared and served on you I the answer prepared and verified by you between the 17th day of luary, when you wrote your letter, and the 20th day of Januarf^ en jraa veriA^ your answer ! — A. Yes, ait. , PACIFIC railwjly coionaeioK. V- Wb«-n >i>u VdriBeil that anfinor, did yoa rrad tlie cuuiiiluim .)\iT r — A. I do QAt kimiir vb«thcr I did or not. tf it wait a long iWu. mriit I ii>i not think I did. If It woa a abort one I |»rcMiime 1 did. ti. In ibt! ^itiitwcj-, yriii state that some partsof tlie complaint anlmv nnd nibcr |i:>rts un* uot. Will 5*00 pl«aM< tell inv hoir yan cotdil imU ihat stHl^mvul amlcr oaLb, anlcss yoa bail read the cooi)diiiiit!— A, I mtppiLti: tbat Mr. Vantlerpoel probably eanM with U aad esplaiunl IL In iMt, and rrat) aiu^i ports M ba wanted to. 1 nay have read it all. | muially take vbat my lawyer mya aa Ibe tmtb. Q. Uoyoa accept I be suggestion of yoor la wyeriu regard to verirying papeni wiiboat eiantninf* for yoonelfT — A. Yea, sir; I bavo u\vnj» dooe titat. Uandrcds and bnndreda of tbin(p^, wbeu my lawyer t-onm and says " It U all rigbt," I do not read throuKb. Q. I>o yon swear tbat tbe fact ia true, because your lawyer lelU joii it iaT — A. 1 do, witb tbis sort of lepil docnnent. It i8 perhaps a littlv careless way, bot then I bare always doiM tbat. Q. Did yon notice tbe fact tbat Sir. Calefbad made an affidavit wliidj was anttexed lo tbe complaint at tbe tine these papers were servctl og yon f — A. I pnsame I dtd; at tbe time I most have kttowu all abftnt il UK. ClUXF-'S JIPFISATIT. C^ I will raad ym Mr. CaleTs affidavit : " Being duly svorti, lajR tbat be is tbe seenCary of Ibe said Kansas Pacific Kailway t'omii«ir. and baa been cnanected with tbe aaaie, and has been familiar witli it» boMBeas and wiib tb« biudBeaa aflsirs of tfa« Denver Paciao lUilw»v and Telegrapb Ooatpaay for abont tea yeani ; tbul be knows the vnlu'c of Ibe abarea of tbe caiHtal sto^ of tbe Kaid I>cover nnil I'acific Kail way Company : that tbe rood of aakl Denver and PAcitiu Itaikiv am! Telesrapb Oompaay is mortsased for •V*M, 4::4,uoa per mile; tbai said tvad baa paid ao diridundti on its Htmk at any time, and baa paid no inienst on its flntt mortgage for about two years : tbat tbe [weaeat valoe of ibe aabl sbarm is merely iiotuiiul ; 1I1.1I Ibey are rgdavd by tbe pUintiff on tbe trial balanwa at oiilv tl |ier fiy-thm> dottat« it was; aad yon also knew at Iht; time if tbt Mork vrrc rxtrioatcd fro* tbe tntst that it w»s to be roiiverted Into lbi» Mock of the I'nioa raciAc Bailway T — A. Yes, mt. i} Di.l ion ron»idertta part of ynsr dnty as nnstee of that mortgase ■ ■■ f»ct to Mr. notmea, who waaeondnAiuj: tlie litigation 1— I did mtt. If il was not deaie we tibould haw <>itli«r foR- ..•.hI ot el»« pnl ibr alork in fora nominal prtct-. Wo conld -I i pHt in lVn\^ VaniK ^x VnA^M of uork as ^OMMO, I Wby conU yon irac rrmate \b«i \annMAa«K «m ^yEa-icvtNnilAK JAYf GOULD. 491 ok, after it had beeu extricated aud exchanged, to the trust which I represented as trustee of the consolidated mortji^age ? — A. The con- idated company would not have made the stock on those terms. »y would have found another wa}'. I. In wliat respects would the consolidated company have been any .^se off, if the proceeds of the stock had been returned to the trustees the consolidated mortgage, than if it was returned to the Kansas jiticCompany? — A. It would have been very unfairto the stockholders he company to have made stock and put it under that trust, because ^as the signature of the consolidated company that gave value to 5 stock. When they made this consolidation they could have made 3 $4,000,000 of stock in another way as well as to make it in this. 8 reason they put in the Denver Pacific was because the franchises their charter led up to a consolidation, and it was considered that t consolidation itself would be more symmetrical to embrace the fran- ses of the three companies. That having been decided upon, the ^stion was how we would do it. One way was to take this stock in $4,000,000, which would give the consolidated company the stock ich they required to carry through the other purchases. Another n was this : We found we could put the Denver stock in at a nominal ee. We could put it in for $100,000 of the consolidation just as well $4,000,000. We had it all. In that way we would embrace the fran- 668 ; the other way was to foreclose the bonds — we had them — ^and ke a title that way, but it would take longer. So that the only value :his Denver Pacific stock was a value that the consolidated company fht give to anything that it put its name to. If it put its name to a id, it \ta8 worth par ; if it put its name to this stock, it was good ; if lid not, it was not worth anything. i J. Was not this stock, no matter what it was worth, the property of I trustees of the consolidated mortgage, precisely the same as this ijsas Pacific stock was your property ! — A. Yes, sir. J. And, as such trustees, was it not your duty to hold for that trust the value that that stock could acquire, no matter how obtained ? — Yes, sir; and that was precisely what the trustees did. J. Then 1 ask you again why, as trustees, you did not insist that after ing up the Denver Pacific stock for conversion the proceeds of kt conversion, whatever they might be, should be paid back to you as stees? — ^A. Because I knew perfectly well that if we did not make it arrangement the Denver and Pacific stock would become utterly ueless. I could not go to the consolidated company and ask them make $4,000,000 stock to give to the Kansas consolidated trust when vas not worth it. I had to judge of that thing by my duty as the stee of the consolidated mortgage. I stand on that, and I knew per- tly well if I did not consent to that that the Denver Pacific would wiped out through the mortgage. Therefore I said, we will take a 'consideration for it. l Why was the new company any more willing to make this 1)00,000 new stock and give the stock to the Kansas Pacific Com- ly, which it did, than it was to give it to the trust which you reprc- ted T — A. Why should they give it to the trust ? J. Why should they give it to the Kansas Pacific Company f — A. »use it was stock that they made themselves. They could just as 1 have got the $4,000,000 of stock without the Denver Pacific as hit J. I ask you why they were willing to give it to the Kansas Pacific I company and not to the trustees of the consolidated mott^^^t — Because it would not have been proper or juat. THoLCsXi^Taaft^^^osft .M-l. v. «. furmc KULWAX i Miwla vlwt liMEj- VMiid pvc— tkat tkej- vonld glre «5Q(t,OOor itodc TiMqr ir««U ftJiet tke noiifaffi U> tlist citeDt. i(|, Wiia ln4 Mile ap tlwir aiiiid* f— A. Tbe parties tbat wen^ mrtj. ia( UitiMMCfi Ui* WHMWliilMkw. So-v, tbe tntMeea were met wiUi iJi Ciiet tb»t tint amKt vooid be vt[«d oot, or tbey coold get tbat cunaU «aUM foe It. What wa« thrir doty I it nj pluo. Anct vii»t t (lid VM Uw mj bM» tlua« tor Xhem, for that tnut. t rrvm tJ>« tni»t or tbe morlga^ exebiuigieA tot L'blou Padfle Itailwaj- slock, would ouly [irmlw ll^lOO or f300,00l).— A. I do itol kiKtw im>tliiii)< about tliat. Voii do uot tbiiik jou wert^ iuronnnl u( H T — A. No. (^. VVvrt; jou iiifuruuil tbat llic laiigua)ce bv used wus, Ibut if t ■lock were extricati-d froiy Um iriut, m> ibut tlivy could do ccrti lliliitfH wilb It. it could uot jiruduceowr «20U,()UU or A3OU,O00 1— A. ^ not kuow au>tbiug about tbat. ' I>id Ur. Dillon t'-tl j'oo tbat fao bad becu beforo the referee!— J ir. <^. Uid >oa know wbu tbe witaeMca were before the re&teef- No, I did uot; 1 did uot [lay auy attention to tliedctailaof it,bntIoi kuow that it waa a wiho arraugcmeut for tbe trtut. I am wilUog VtiUii tbu rf4t|tnunll>ilit.v for it that day, or this, or any oLber. Tliu (^jiuuiinitioii tbcu ailjoarucd l<> Wednesday, May 18, 1887, itlj N(i. 10 Wall Bikket, New Yobk, lVW«f«day, May 18, 1 l jiur^imiit to ailjouniinoiit , all Ibc ComniiuioiKn ^^^^ml'hfi Oouiniinniou ^^Hgytpft |)rvH(jut. ^^H JAY (!(>UM>, l>ein^ further exumined, teatitiod oh foUowa: I ituil liad The WiTNKKS. Ill ftiiKWer to a iiuostion ypslerday, I gave tlie nils n((u of Lliu two main lines, tlieir bonded dtdits, the bonded debt |HTtnile ituil the Htock {ler mile. I only apoke ut random then. I liavu nai bud u caruf'ully-itrciiarvd isliituinent iikuIo, which I would like tu Milt Htltulo iia the uuhwit. InhIoikt AMliKitHON. Certainly. The [)ii|i«*r oll'e.red by Mr. Gould ia marked " [exhibit No. 1, Hh; I^ '■"!" and is an follows : JAT» GOULD. 493 f^idMi, HuHnt^g vrinc^l and balance of interest, due to the United States, January 31, 1880. D^NPaeifle f^^M Pifitto and Leavenworth Branch jpw* PiMdfto, dedneting Mnooai owned by the Kansas Pacific Otmov TMd. Mileage 1,042 078) >779 106 > 1,821 Amoant. Per mile. $88, 472, 391 10 ,$84, 006 32 52.247 43 45,883 85 85,162,518 50 58Koob'o6 124,215,909 60 5,481 13 68, 213 02 Capital stock January 31, 1880. VilaFMillo tmm FMiflo and Learenworth Branch UtonrPadflo Mileage. 678 106 1,042 779 Amount. $36, 762, 300 00 *9, 809, 350 00 IMal. 1,821 46.571,650 00 Per inlle. $35,280 51 12,502 23 25. 574 77 •OrtrtMMJhig, aa rtova $9,809,350 iMMFiMttfe atook in treasary 191,750 DMfvPaettABtook In Kansas Paoiilo treasury 3,998.900 TMal : 14,000,000 The Witness. I have also bad a statement prepared for the Com- nteioD, if they desire it, of the official transactions in the stocks of the two roads from the 1st of January to the date of consolidation. By Commissioner Andebson: Q. The iBt of January, 18801— A. 1880. The paper is marked "Exhibit No. 2, May 18, 1887,'^ and is as fol- lows: Jan. 2, 1880. Uia.Pie.lOO(l>.a). 235 26 KaM-Fsc. S00fb.e.). 20t(i.e0). 20 200 Jon. 8, 1880. Ub.Pm^50 100 (b.0.) 200. 100. 100. 100. 20O. KsB.Pae.100 80 87 88| 88 87 86 801 85} 85| 85| 851 85 87 Jan. 7. 1880. nn.Psc. 200 85i Kao. Poc. 300 88i Jan, 8, 1880. Un. Pac. 125 (b.c.) 86 700 (b.c.) 80 800 (b. 3) 86 Kan. Pac. 400 91 200 (b. GO) 92 Jan, 5, 1880. Ub. Pto. 100 (b. c) 60 280 100 100 (b. e.) 100 85 84{ 84{ 85 Jos. 6, 1880. Ui.Pao.]00(b.o.)... m MOCb-c) 86A Xa Pits. 100 (b*c*) 87 200 200 200 , 300 600 2U0 200 (b.c.)... Jan. 8. 1880. 01 Oil 92 92| 93 93i 93 Kan. Pac. 10 93i 50 924 100(b.80) 94 Jan. 9, 1880. CJn. Pac. 200 100 400 5 100 (b. c.) 500 30 20 300 100 (b. 3).. 86 861 80| 87[ 801 861 861 86^ 86i 864 Jan. 0— Continned. Un. Pac. ICO 86i 100(b.3)....^ 86| Kan. Poc. 600 , 924 500 (b. c.) .. 300 100 700 (b. c.) 100 200 200 100 100 100 100 700 200 10 9-J| 93 93 93 ii.*)! 921 93} 9:ti 93} 94 9:>| 90 97i 97 Jan. 10, 1880. Un.Pac. 200 86} 700 45 450 (b. c.) 375 100 100 600 200 50 100 300 100 100 100 VW 87 87* ?7i 874 87| 87i 87| 88 ^ 88* 88g 88 ^\ U. 8. PACIFIC liAir-WAY COMMISSIOIR Jan. 14. UW)— L'outlnunl. . es '. M , 81) :f '. so i 80 . BD : « : n ; « ■ m . HB '. uu 0" . K Cu. Pie. aion.S) 100 (bin *>m'."." I, wo soo loa K». Pic. liiO(b.o.b,a). i«)llnj.| iS-""----" »!> " K . W no IO«(U« aw .... ^ '.r' iS^t!::::: m^Sr'.'." .. H a,»o WD 1,100 aoo OM ■S*"::::: » Jan. 16. IMO. .. m i.«S::::: ^■S 400 (Ij. IJ LIW " m! I«l(ll,0.) MO .. ut «0(I^W.... soo(b, MO too M» '•a?."::;;: ;: ^ S!::::::::::: ■■ P Euoibiv.)!:;:.:: ss mo W5(iiai ■; 1 auo ■■IM '.'"." '.'.'.'.'.' ■■ !l! •>MI(b.n) '■ISJ:::. 3{« aoo .... ■.i .a ;i ill) J-.B. H.IMO, Kan. Par. »0 ano(b.t.).... ;ioii ii,:' m iw iiKi («. : Jnn.l6, ISSO. 'JJ i(1S"" is?:. m ... 1,^ :::::: :'::::: '■Z\ir.-r-"\- i.aoo , .... tlMtlj.C,l 01 l"ii(i..r.f.ni . m .... I>1 »1 on Tn.r«.7.W 6«t ^■^,b;« 400 '.;"'M'i.3i 2W.... JAY OOtJLD. 495 /m. 17. ISeO-CoatiiiMd. nc. H9 ............... 100 2,W> l.iM -. .- l,*flTOOi."i.*"".*.IIir. 90 i.PM.1,000 100 200(b.e.) 109 100 300 Ok 8) 101 :foo(b.iO) 101 500 100 100 (b. 10) 102| 1M(b. 10) 1021 100 (b. 10) 103 100 101 200| «K) 95J ario 954 200 (b.c) 954 800 95 100 94; 10 95 100 (b. 15) 94| 200 94i 100(b.3) 95 954 95f 9r4 95 94| 941 20(b.c) 954 200 95 400 954 5 85 100. 100 100. 100. 100. 200. Jan, 21, 1880-Coniinned. Un.Pac. 100 95 700 954 100 100 Kan. Poo. 100 (be) 100 90 200 064 200b.60 084 200 98 Jan. 22, 1880. Un. Pac. 100 954 10(b.c) 96 100 94} 400 200 (b 3) 300 .•iOO 944 100(8.3) 944 100 Mi 200 9i] 700 94] :jo 941 100 944 200 044 100 041 100 944 Jan. 23, 1880. Un. I'ao. 500 94 100 93} 300(b. c) 93 100 92 400 924 600 93 200 931 10(c) 93] 125 93 400 93i 450 984 200 93} 200 (b.c) *.. 934 200 98| IOO 934 100 (b. 3) 94 600 94 100 200 100 (b. 3) Jan. 24, 1880. Un.Pac. 200 93! 50 93] ^200 93J 100 03i 100 (b.c) 93} 200 g»i 100 94 600 94| 200 94 300 94] 200 94 200 931 100 934 900 93 300 I»4 400 934 Kanfl. Pac. 200 (b.c) 96 100 95 200 96 200 98 f9G r. S. PACITIC RAILWAY COMMIHSION Q. I do not qnitc nuflerstaDd what you ineaii Ity tliu ultlv-ial trauae^ liouB. — A, The Ni-w York Btork Escbange kec|i what tbcy call t^ olticiiil liRt, giving itil iLe tiiinsaitUotift that occur in ttial boiinl. Q. Showing Ibe market ratef — A. Sbowiiig nil Itie iiurvbases ii bsIpb of eaob stock during the day. By Coumissiouer Littler : Q. Does this embrace all! — A. Tbiit embracce all. CommissioDer Andkbson. I would say that wc liavc oi-drrcd tba (|Uotation8 of all stocks for each inontb, giving tli^ highest and Jownt jirice, fVom the Ist of January, IS78, to the lat of .luty, 1880; but, of course, we will accept that. The Witness. I also prepared another stutfineiit, showing tlic hp, ination of this ICausas Pacific cousoUdatecl mortgage, and showing itig saving iu priucijml and interest. The paper oflered is marked "Exhibit No. 3, Mfly 18, 1887," and ii as follows: l^i, OUB, ouu of I'ooxOldiXod bonda iH-iU-iuj; «li pur ni li percent, finit mortgage In, ;iO:t,00() 7|>or cent. Leavenworth brftncb """ "~' T percent, iacomea 7 per cent. Denver ex tnnBion 7 percent, first Innd grant 7per cout. tecond land grant lOlierccnt. Aindhig 7 percent. Arkansas VoUey 6 per cent. Solomon 7 per cent. Fort Koorney Oper cent, conpon certificate*.... ToUl •3,T»J.350 Sfemoranium of Eantiit Pacific Jand pvnl. Not sali-M to date H,l"l, When EouHolidaled niOTtgaRB was issued tbeio wire feerea unsold mliout 5,li»,«0« nilU mcdvaliln (exclusive of Denver Poomu) 1,31&,(II)I)H Totnl ^.ttTATGRi Making tUo laud i^runt reulixint; ubunt $18,000,000. The Witness. T believe you e«Il«arty oat. Tbis, as well as the capital stock of te Kansas Faciflc,is stated in detail in the paper I nowsbbmit toyoa. The aocoosts offered are marked « Exhibit No. 4, May IS, 1887," and s« SB follows: Kantat Faolficpool. j^roU", 1879, toC. S-Gredey 1367,585 42 Utftky.lBT!}, to John D. Pony 179,600 W March 7, 1879, to B. W. Lowii : "... 72,938 12 Mwoh 8, 1879, to B. M. EdgoU 107,503 46 UktcIiB, lt<7!), to Adolphna Ueier 116,874 IV MftfcbS, 1879, to F. W. Meister 45,699 70 ICaith^ 1879, toBobfirtE. Carr 62,037 70 Hatch e, 1870, to P. M. Eilgorton f 16,861 42 HarchS, 1379, to William Tliaw 46,219 46 Hirebe, 1879, to M. K. Morelicatl 17,879 38 lUroblil, 1879, to II. H. Hoaston 79,076 99 KiMh 10, 1879, to EliaaD. Kennedy 21,066 35 Hinh 10, l«79, ro Henry Martin .*. 112,633 48 Uucb 13, 1879, toO. H. Pftlmor 11,371 65 Miiel UO, 1879, to TboniM A. Soott 54,184 08 lUnblD, 1870, to Jay Gould, aaudry Dooaritien 1,354,130 26 Dteemtiet 31, 187U, to capital 493,069 2!) 3,068,024 99 ltaMlil7, 1879, liycominittoo, |4;t0,000D. E.boodi ICinhl7, 1879, by committee, 109,!>78 Btiaret of KanusPMifio stock Mmh 17, 1879, by committoo, cert iS nates of KansM Pacific consolidated Dortgwe 3,036,062 49 Jana 1^ 1879, by committee, certificates of Kausaa Pacific consolidated Kortme 15,732 50 JaljS^n79, by committee 6,250 00 3,066,024 99 ABSTRACT or JOURKAL BNTR1B8 COMCEBNIMG TUB KANSAS PACIFIC POOL. Harcli 7, 1879. SwidriM to itk National Ba»k. Far pntehose of C. 8. Oiooley, of Saint Loaie, Mo., tbefuUowing secuTities; K>OMBPaeifiasto,80l8liareB, KWeooli, at6i 1161,818 75 ■ -" 3,250 00 18, 120 00 77,600 00 42,500 00 AntannaB v&uey ouuub, voo,wi/, hi, iTU ucuie...... 9iB,vw LeaTMiworth ficonoh, 140,000, at 60 centa 20,000 DniTsr ezteuHion boQdB,pool aDd second land-grant bonda $42,837 37 Kx montW InteMflt at 7 per cent., aix moutba' interest fttSlpereent 1,499 30 March 7, 1879. SdndrUt lo tik National Bank. For pimluMe of John D. Perry, of Baint Louia, Mo., the following seoniitlss ; Konsoa Pooiflo atook, 11,567) shares, at 6} $73,932 94 Btompedincomebonds, 142.900, at 30 cents 18,870 00 Second laod^rant bonds, |110,666t, at 50 cents 56,333 34 AikMUHVaUey bonds, $35,000, at 50 cents 17,500 00 DenTW oxtenrion bonds pool, cash paid 130,932 41 Intorat U per oent 733 63 81,664 H JAY GOULD. 499 March 8^ 1879. ' SuMdriM to 4th National Bank. lane of Bobert £. Carr the following Kaasas Paoifio seoarities through C. 8. , attorney : lePaomostook, 6,259 shares, $50. at 6i |38,118 75 unped ineome boiids, |7,000, at 50 8,600 00 ped ineome bonds, 16,450, at 30 1,9S5 00 isas Yallev bonds, $90,000, at 50 10,«X) 00 er Extension pool t^t^^ 87 Dst on same, six months, 3^ per cent 253 08 7,483 95 62,037 70 March 8, 1879. Sundries to 4th National Bank. lase of D. M. Edgerton the following securities : IS Pacific stock, 768 shares, $50. at 6i |4,800 00 isas Valley bonds, $19,000, at 50 9,500 00 er Extension pool $1,895 09 )st on same, six months, 3^ per cent 66 33 1,961 42 16,261 42 March 8, 1879. Sundries to 4th National Bank, ase of William Thaw the following Kansas Pacific securities through D. M. •n, attorney : ks Pacific stock, 3,303 shares, $50, at 6i $20', 643 75 isas Valley bonds, $40,000, at50 20,000 00 )r Extension pool $5,387 16 tst on same 3^ per cent., six months 188 55 5,575 71 4&,219 46 March 8, 1879. Sundries to 4th National Bank. ase of M. K. Morehead the following Kansas Pacific securities through D. urton, attorney : a Pacific stock, 1,234 shares, $50, at 6i $7,712 50 »ed income bonds. $26,700, at30 6,0];0 00 )r Extension pool $2,088 95 st on same 3^ per cent., stxmonths 72 93 2, 156 88 17, 879 38 March 8, 1879. Sundries to 4th National Bank. ase of H. H. Houston the following E^ansas Pacific securities through D. M. n, attorney : s Pacific stock, 3,926 shares, $50, at 6i $24,537 50 1 land-grant bonds, $50,000, at 50 25,000 00 sasYaflev bonds, $40,000, at50 20,000 00 tr Extension pool paid $9,216 90 st on name, six months, 3^ per cent 1K22 59 9,539 49 'w U. 8. PACIFIC RAILWAV COMMISSION. Murcli 10, Itfi9. Sui^rirt (0 ill) Nalioital Btmk. «ii|liD. 1 k FdTpntchaae ofEHiM D. Kdiitiodj the fblluwing KftnaM PaoiflcaeeoriUei tbranibD, M. Edserloii, attoniey; Kansas PodiQo Btoch, 1,364 sfaarei. t-'iO, at 6} t^&SN Scconcl 1 an (1- grau t lionds, $6,000, at 60 S.MOM ArkaoBOs Valley bonds, (10,000, ntSO 5,000 M Leaveuvorth llrauch bouds, (4,000, at 50 ^,000 « Denver Esteiiei on jiool |3,4^ 41 IntnTOBt on BoiDO, six months, n| per c«nt S5M Miircti to, Ign. Sandrka lo ith Xallonal Bank. For purchase »f Ilciity Martiu the foltowitii; KansoH Paoilic sucuritivs : Kansas Piicillo stock, G,3-i0 xbarea, t-Vt.at r>i (33.9*1 « Stam[>Ml iHaoinebuniiB,(140,150,at30 43,1* « ArkansiiH Valley bomls, (35,000, at 60 IT.MUlll Denver ExteuHi on i)ool (13,188 00 loturotil on Baiue, six mouths, at 3} per cunt 459 48 — 13,M« 1111,(31 ffi Muroli 13, 1879. SundHiit lo ith NalUmal Banli. For imrobaaa of O. II, Palmer the following Kansas Pneiflo aecnritiee : Kansax Pooiflo fltouk UnBteimiioa income bondu, (5,000, at 50 HanW 81iimi>eiliuuomobomiB, (25,000, at 30 7,311(1 * Deliver Eitonsion pool (1,325 4g Int«rrat on same, six montbs.Sl percent 46 39 1.371 « 11,371 ft Mftrch ao, 1«70. SittidTUt to iA National Bank. For purchase of Tbomaa A, Scott throngh E. D. Barclay the follofring Kansas ?tiai^ Mcaritios : Kansas Pacific stock, 3,646 shares, at 6^ (22,781 *' Stamped income bonds, (06,800, at 30 19,660 5S Arkansas Valley, (10,000, at .W 5,000 f" Denver extension pool assessment (6,315 48 Interest on same, SIX months, 3} percent S2 0,536 &S 51, IM 0* March 10, 1879. \ Satitat Pacifiapool to eapilal Focamonnt of Kansas Pacific seoarities held as of March 10, IH79, and throiru Id lb' pool with others : __ (764,000 funded bonds, at 80 (627,200 55 9,143,600 stamped income, at 18 385,fi6aOO 160,000 second land grant, at 18 K.SOO O* 48,050 unstamped income, at 18 H,«9 ^ Asseeoment on valuation, (1,537,680 203,813^ 1,264,130 «* U. S PACIFIC RAILWAY COMMISSION. 7^^^| Company, tuii iRbra [K4, 000,000 of couMliilalud boudsboBriog l)p«F««ii(. lulcrul tn ratln bond, niktiiis K HTlaf iliHg I>r>bl. Aunnil iirtRvL Gperceut.lirat mortgaBe Jfl.Ma.OOO j;jTe,l»)M 7 por cent. LBBvouworth bmnoh G)0,000 43,0«}ou J per eent. incomes I.!n5,;t50 299,274 SO 7 jMif (lunL Douvnc estousioti tl, 379.000 44fi,5JU» 7perc«ar. first Iirnil grunt 8, 000, QUO Ua.mO) 7 put cent. EUDoaiiUutl grant 1,500.000 I'^.HUiU IOpurcent.fuiidiDg 1,&00.000 l.W,OWHiu 7 pBr{>eiit.ArkBnga8 Valley 1,13.'>,000 TS,»I3U0 B put oont. Solciiaon 57.S000 34,600 011 7percont.FortKcaniy 970,000 BJ.9«D0 . B par ouut. coupon oertlficatoa ii, 500, 000 130,000 ffi TotuI 27,727,350 l.«H,IMM 34,000,000 1.44O,0aiin •3,727.360 t4a8,134S0 iTcmorandMrn of Karnat Paafle landj/tanl. Lnods have b«eD sold to (tate amounting to --. (Itl, 05S,8SI U Land salea uauccled to date . 1,884,999 Sf Net sales to dato , 14,171,»g When consolidated mortgage was iiBUod there were nores nnnold, alKiut ."- 5,10O.00D Bills rewjivabia |1.3i5.flW Exclaalve of DonTer Pacific. ,t nroBont trnstf^es have tlie rnllowint;: soldld ■ ■ ' Unsold lands, aljoiit: , . BUlHreceivable ." 4,86D,7« Cash SM),«» I Making the land grant realizing about S19,0O0,00U. ' KANSAS PACIFIO EBOEGANIZATTON CERTIFICATES. Q. Will ;oD please exiilain to iia wliat is referred to in tbo stalentenl made to ns by Mr. Sage, aiid nhicb, uniler date of Marcli 18, in dfscribeil lis 4200,000 Kansas Pacific reorganization certificatea T — A. My nnJ*r- Htandiiig ia that those were certificates tliat were iesued in tbe interim to entitle the holder to draw consolidated bonds, when they were finally ready for issue. Q. And tbatthey represented the amoiiut in value or in dollars wli'i^'' the holder was entitled to receive in bonds, and that the flgure was Ar- rived at by scaling down the securities wbicli he had owned, aocoriinl to the prices for sacii scaling stated in tbe pooling agreement)— A- That is my recoUectiou. In my papers I think yon will And a deiailen statement of tbe settlement with Mr. Sage. I do not find tbe aocoon' with Mr. Sage in here. Commissioner Anderson. Tbe explanation is qaite sufficient. Tbe Witness. Bnt there seem to be certificates of consolidated mort- gage bonds issued up to that date, so that I infer my answer coven it- Commissioner Andebson. The conclusion we derive from yonretoU- lent is that the sale made by you on tho ISth of March to Hr. Ssee ■ Oiffeience la pilnoisal. \T>vtEtsr«nvc«\iL Bm{D.'u!L\sosition had been, simply, to the trustees, '^ Now, gcn- lemen, if you will put in your Denver Pacific stock, we will consoli- late with that road, and throw the guarantee of this fifty million dollar ompany around your bonds," it would have been the duty of the trus- ee to have accepted it. But we got a still better bargain than that. ^e got the (500,000 stricken off from the mortgage — that is the whole hing in a nut-shell. Of course, the consolidat^ed company would not aake it into new stock and throw it into an outside trust. It would lave been better to have made stock which they could just as well have oado through the consolidation in another way, and kept it. There ?a8 no object in their making this stock and putting it into a trust. I ras working to make this trust better, because I was the largest holder f the bonds, and I was the trustee of them. But there was no director U. 8. I'ACIFIC RAILWAY COMMISSION. or iDdiridual tliat miulu a duller out of tlio tranaHctiaa, and I am verj- glad to have an opportuiiity to i>ut a final nail in that coffin. I held t million of the Denver Pacitle stock, and I put it in at jost what It cwt ne — 10 ceuta on tLo dollar. Q. I think I iinderHtand your explauatiou, but it does not aoswuttiie qiiesticm I put, whieh is: whetber tbo consolidation would not hav^ lieen e(|ually effective and have attained all the objects proposed bj eonverting direiitly tlie IJcuver Paciflc stock with the trnstwu, auil banding to ttiein tim new stock of the consolidated company, wliieb, under the consolidation, though held by tbe trastecs, wonld have bei>n the actual property of tbe Union Pacific RaUway, jnst as any otiifj jiroperty that tbe trustees held, and woold have passed to tbe tTnlon Pacific Uailway under tiie consolidation with the Kansas PactflcT— a, Nn, sir; it would not liavo gone to the new company. If it bad gone into tlie liu.nds of tbe trustees it would have gone specifically to tiiow hoiidn of tbe Kausas'Paoific. Q. As collateral 1 — A. Aa collateral. Q. llut tbti real owncrsbip would have been in the consolidated con- pftuy t — A. No, sir ; it wonld have been in the trastees. The tnutm hold the legal title to the security. Q. True; but after payment of tbe consolidated bonds tbe Union Ft- cifiu would bavo derived tbo entire interest from tbo equities; lit tlutt not so t — A. After the payment of tbe bonds, many years hence; tnt that would have been nnbuuiness-like in the consolidated compaDy,aiid they would not do it. That would not have been done. That is tlia point. Q, I want you ta teli me in what respect they would have been ata (lihHd vantage with this new Mtock iuthe hands of the trustees instead nf putting that new stock into the baudu of the Kansas Pacific Compony itself F — A. It wonld bavo been unjust to the consolidated compiu;. Uiuler what oIiHgalions were they! They had benefited themMlTm euougb by iho consolidation. Under what obligations were tliej to make a specific security I Were they under any obligation to deposit 94,000,0110 as addiliouni security to these bondsT Tbe bonds woreoati the riglils were Hetlli'd; and tbey would not have done it, Itwoolu not have been this trust, and it would have taken so much more of the revenue of tbo company to ply into this trust. It would have gone to tbe redemption of bondiL )( would bavo been a volnntJiry addition to tbe siukiug fund of tlieMW- pauy. JAY OOULD« 506 Q. Do yoa not know that the dividends on collateral are usually and utomarily paid over to the holder of the equity so long as there is default Y — ^A. That is by agreement of the parties. Gommissioner Andebson. It is the custom, unless there is any de- lit. It may be that the holder of the bonds might have impounded B income. That is true t rhe Witness. But there was another reason. The company did not int to enlarge their stock any more than was necessary ; and, to carry rough this general arrangement, they required acertain amount of >ok, and if they had made this stock and immediately impounded it, ey would have had to make as much more to carry out those purposes. Q. What were those purposes t — A. That was to pay off the obliga- ms which the Kansas Pacific had incurred in the purchase of these anch lines. Q. Exactly. Then the real advantage gained was that by freeing this ock from tlie obligations of that trust the consolidated company could be it in the discharge of the obligations assumed by the Kansss Pu- fic in regiEud to the purchase of the branches t — A. Yes, sir. Q. And those branches were purchased from yon t — A. Those branches ere purchased from me. Q. So that the effect of the freeing of the stock from the trust of the ortgage was to facilitate carrying out a bargain that had been made ith you t — A. Yes, sir. CONOEBNING PUBOHASE OF MTSSOUEI PACIPIC. CJommlssioner Anderson. I wish you would explain to us a little ore fully the sketch that you gave us yesterday of your acquiring an terest in the Missouri Pacific, and of the design you had, in connection Lth the railroad to Loveland Pass, to make a through system of com- nnication to Ogden. The Witness. There is Loveland Pass through the mountains. [The itness indicates a line in ink on the map, starting from Denver, fol- wing the Colorado Central right up through the canon in the mount- ns, and thence continuing westward to Salt Lake, and marks it ^'Lo ve- nd Pass Line."] There is the Missouri Pacific as I bought it. It ran om Saint Louis to Kansas City, there it connected with the Kansas acific. With the same purchase I got two little roads, which made le link between Kansas City and Atchison, and there connected with 16 Central Branch. By Commissioner Littlee: Q. What are the names of those two little roads f — A. I do not remem- er the names. I think one was the Jjcaven worth and Northwestern, ad the other some other name which I do not remember. By taking le Kansas Pacific and running right through, as indicated before, to £dt Lake City, and thence to San Francisco by the Central Pacific, it lade the shortest line across the continent. It is undoubtedly the true ne, because the Union Pivcific, in the construction of it, kept north of le mineral belt ; they had not discovered it at that time. The Southern *aciflc kept south of it. The mineral belt is the Central line west, and tiis line extended would go right through it. It would p»y largely as local road. The Chaibman. There would not have been so much mileage, how- vert The Witness. It would have been so much shorter than the o ine. t:. 8. PACIFIC KAILWAT COUUISSHK The CHAUtlU5. The first line wrs loagvr by reamn of the rflnle iWy took, which wa« probol)!; dooe to obtnin the grant b; the Clorpnunmi, per miU t The 'WiTTTSBB. Ym, sir; that might hare beeii it. By CommiMioDer Asdkrson : Q. Ihat waa tb« design, as yoa had it in your miml, when yoa jmr cfaaacid the UitisaQri Paeifiel — A. Xo, not whvn I purchuiwd it. But, after 1 got it. and my interest changed, and I t-amr tn see what itK rjiu bilitiefl were, J of coarse saw wbal an immeniw tiling I coiilcl inttke lij turning my hand over. Bat after 1 let that opjKirtnnity go tite Atiiwoiir) Pacific took its course off aonth and aonthwent. 7%n( repretviritti tlio Miwonri Pacific (lystem to-day. When 1 boiiglit it it wiih 2)bniiltii, and now it is abont 7,000 miles. [Indicating on another mn|illiuUja Bovri Pacific system.] Q. Tbat is, the net-work tliroH^ib tiie Iron Mountain and the Kibm Pacific and Texas Pacific and International and (ireat Nnrthmt^ Yes, eir. lUTECT op DIRCLOSrHE OP TDF. PACT tiF rt'RCBAEB, Q. How soon after yon liad pnrchaHcd tlic MiittioaH Pacinc did jm disclose the fact to your associates in the ITuioii Pacific ? — A. Tt noit have been very soon. Q. Tbe matter was a liabliu matter, was It not t — A. Yea, isir. Q, And was noticod in the prints at the liniel — A. Yes, sir, (j. You say the 13tlt of NovembtT was the day of the purchasel^A, Yes, sir. Q. IIow sofm after that was it that, as yon have xtutctl, thciy bixiaiDe ikgitatetl and communicatee! with yonf — A. It must liavB been within a month of thut. Q. Did they first write letters!— A. [ think ibry came on her«, Q. Yon do not think there were any letters written! — A. No, >ir; I do not rememljer any. Q. You have none ! — A. No ; I write few lottcrs. Q. I Jim talking about Mr. De.st*>r and Mr. Ames. — A. No ; I ilo not think they wrote. Q. Did they come on more than oncof — A, Tbey were on htm tn- qnently. I think they may have been here more than once, Q. That iH, Mr. Ames and Mr. Dexter, and wliat other uameaof jn- tlemen do you remember as having come on hero T — A. I think Ur. Dex- ter, Mr. Ames, Mr. Atkinson, probably Mr. Oaker, ami Mr, Dtlltm. (J. Mr. Dillon was here, was he not! — A. Ye8,sir; Mr. Dillon irai hero. Q. Did he unite with tbom in this agitation and iloslru to have joo abstain from putting through tht» Missouri Pacific lino T — A. I pronme ho asked them to come here. I think very likely. Q. Was he interested with you in the parcliaso of the MiwonriP*- ciflol — A. No, sir. Q. Was Mr. Sage interested with ynu in the purchase of the MiSMori Paeific! — A. No, sir. No, I had no partners in it. Mr. Sage w«8 in- terested, lung before 1 was, in the Missouri Pacific, '}, And be retained his interest after you obtained yours t— A. Bi tfued his interest ; yes, sir. : How many interviews do you romembcr having with thtaehw- [entloioeu Gefore the interview at which you signed a pii{ierngKe> 0 the (jousoUdalion ftnuVj 1 — \. Y 4q \\iit ttimember. JAY GOULD. 507 Q. Were they namcroas t — A. They might have been. I only remem- ber this one. Q. Were coanBel present at the time f — A. I think not. Q. Neither Judge Dillon nor Mr. Holmes f — A. I think not Q- Nor any lawyer representing the Boston gentlemen t — A. No ; I think not. I think it was jnst a meeting of the committee. Q. Please locate, as near as yon can, the date of the paper which you say you gave to Mr. Dexter. — A. It was within a very few days after I resign^. Q. Without reference to the resignation, your purchase was made on the 13th of November, and you say that within a month A. (Interposing.) I ceased to be a director on the 10th. Q. On the 10th of what t— A. 10th of January, 1880. Q. I know that ] but I want to get at when your interview with these Boston gentlemen occurred. You say they came on within about a month a^r you purchased the Missouri Pacific t — A. I think it was in January. Q. Have you no written entries or memoranda from which you can fix the date of that paper f — A. No, sir ; I can only fix it that it was af- ter my resignation, and of course before the lawyers had any instruc- tions to prepare the consolidation papers. It was between those times, because that memoranda was the basis of the consolidation. Commissioner Atydebson. The memorandum, except from your sense of the impropriety of having it executed while you were a director, might jnst as well have been executed before the 10th of January as after t The Witness. Which agreement t Commissioner Anderson. The memorandum which you gave to Mr. Dexter. The Witness. Tes, sir ; I should not think there was any impropri- ety in it at all. Q. Even though yon had been a director f — A. Even if I had been a director, there was no impropriety in it. Q. Did you keep a copy of that paper!— A. No, sir; I did not. I presume it is on file with the company. SUBSTANCE OF PRELDCINABT PAPER PROPOSING CONSOLIDATION. Commissioner Anderson. You stated yesterday that the paper coin- imitted yon to the plan of consolidation, and also contained an adjust- ment for the purchase of the branch lines, the Saint Joseph and West- em, and the Union Pacific, Central Branch, and the Kansas Central l^onds. The Witness. Yes, sir. Q, You say you presume it is on file t — A. I suppose so. That was the foundation of the consolidation. Q. Why should it be on file unless it were an oi][icial act of one of the companies t — A. Well, I do not know that it would be. Q. Was it an official act of the Kansas Pacific or of the Union Pa- cific BailroadY — ^A. No, sir; it was not an official act, of course, but it ^as one of those preliminary steps that always precede these arrange- ments. You have got to first understand whether parties owning large interests would consent. There is no use getting np papers unless the parties are going to agree to something. So these preliminary steps always antedate the consolidation. CoHDimiBsioner Anderson. It is what politicians call a <^ caucus'^t Ihe WITHB8& Yesy sir. 508 U. S. PACIFIC RAILWAY COMMtSStON. Q. I would like to know whether this partienlnr arrangement, which certainly was of importance to all parties in interest, appears on the records of either of those companies prior to the 24th day of Janoaiy, 1880, either in the record of any executive committee or in the records of the meeting of any board of directors ! — A. That I do not know. I was not a director, and was not at any of the meetings. Commissioner Anderson. Still you became a director again in a veij few days afterwards, and you might have examined the records to see. The Witness. I never became a director of the old companies. I became a director of the consolidated company. Q. As such director you had access to all the books of the old com- panies ! — A. I never looked in one of them in the world. Mr. John F. Dillon. That paper is in existence, and Mr. Dexter will produce it. Commissioner Anderson. Do you know its date t Mr. John F. Dillon. January 14. Q. What else is covered by that paper beyond the fact that the con- solidation should go through, and that the branch lines referred to should be purchased ; by which I mean the Saint Joseph and Western bonds, the Saint Joseph and Western stock, the receivers^ certificateSf the Hastings and Grand Island bonds, the Saint Joseph Bridge bonds and stock, the Kansas Central bonds, and the Union Pacific, Central Branch ! — ^A- I believe that embraces all. Q. Was there any other subject-matter treateut when I became the owner of the Missouri Pii' cifie 1 saw that if I sold all those ])roperties it might embarrass thede^ velopment of the Missouri Pa(!itic; that they became natural feeders (► ^ that property, and my inteiest became very embarrassing. ^^^^ Q. in some way you let these gentlenien know that your idea was t<:^^ turn the Kansas racilic securiti5Q\xMt that yoa had JAY GOULD. 509 itted yourself to the other scheme; is not that itt — A. Ifeltcom- 1 to it, and I knew that if I carried oat that scheme it would re- 1 great injury to the Union Pacific. NSION OF THE MISSOURI PACIFIC— ITS PBOBABLE EFFECTS ON UNION PACIFIC. How great an injury to the Union Pacific would the extension of Missouri Pacific, according to your views, have beent ) Witness. Extended through to where f nmissioner Anderson. To Denver and San Francisco. — A. It I have destroyed it. At the time you purchased the Missouri Pacific you were a di- * in the Union Pacific t — A. At the time I bought the Missouri c ; yes, sir. And you remained such director until the 10th of January follow- -A. Yes, sir. According to the ethics of Wall street, do you consider that it is ntely within the limits of your duty as a director in a great cor- ion to purchase^ while such director, another property and to de- in extension which, according to your own statement, would ab- ily ruin the property in which you were a director, and to seriously ler the scheme with that admitted result t — A. No; I do not think PTOuld be the proper thing to do, and that was the reason why I is go in the direction I did. StUl you admit that you did form the scheme, and you considered hui a month after the purchase f — A. I could not help that, be- lt had been discussed for years and years by the Kansas Pacific, ^hat was one of the things that we had been so much afraid of ' done, and which had really induced me to gradually take an inter- the Kansas Pacific. It was to protect the Union Pacific against thing. You did not buy the Missouri Pacific to protect the Union Pacific, ou t — A. I bought that to protect the Kansas Pacific. Mr. Garri- ad projected roads out in the Kansas Pacific territory, paralleling an extent, and I went and saw him and had a stormy interview or and Mr. Dillon did ; I sent him down to see him. With whom t — A. With Commodore Garrison ; and I told Mr. [son that I would extend the Kansas Pacific east as far as he did I would go to Saint Louis, for that matter. He then said, " You l)etter buy me out ; that is the cheapest way." I asked him what irice was. He named it. I think it was $750 a share. I said, right ; I will take it," and among the other things he owned this as Central. I took that with that purchase. That is the way I by that. He was starting that out also. nmissioner Andebson. You have told us that before the purchase e Missouri Pacific you had advocated the consolidation of the a Pacific with the Kansas Pacific? b Witness. Oh, yes, sir; certainly, I was always in favor of that, [nmissioner Anderson. You have told us also that after the pnr- \ of the Missouri Pap«|| ideiitified with tbcse gontlenien, and, of uourse, if tlioy w(tnte to Ivt iL go thuotbn- way. THE EIcnTS OV THE UNITED STATES. Q, In the diHcharge of your duties us director of thu Uniuu Paciflc, and in tliia whole matter, did you evei' consider Iho duty yon oval to tbo United States, as representing iti^ interest ax a largu credilorf—A. Ves, sir; I tboaght of that very often. ,m),i>00. Q. When, then, you say that you eotisidered the rlghtx of thetioT- ornmoDt as u oi-editor, 1 assume that you inran (hat you merely exam- ined the value of the security, and not that yon weiv a devotfxl odlrer eot of the Uovernment, and would try nud jinttect it uh agnintt itli other interestsi — A. Yes, sir: I wanted to protect the (roverometit; but I conuidcreil tbeir legislation destraotlve of their own iiilnwl. My plan was to pay the Ooveriiment — and we otTered lo . L Q. Do yon not know t Was it made by you 1 — \. 1 do not knav ^^^■^tlier it was made by me or by the c^impitny. ^^^^^S, Was it not simply an oHVr to [lay n certain sum i>er aDDUiD. ^^^^Kb yoa figured out aa being the equivalent of the cash value of tli« ^^^^Hl — A. No, sir; I offered to pay the jiresent worth of the dehL ^^^^K Xu cnah 1 — A. lu t^aKVi. 'SVw 'wWAu U\\w>*. J AT GOULD. 511 Cammissiooer Anderson. All I can say is I have never seen that Ter, and I have examined all the records quite thoroaghly. The Witness. I did make that offer repeatedly, and I was ready to irry it out. Q* You mean the then value of the present debt and the accrued iterestt — ^A. Tes, sir. The Supreme Court had held that the princi- id of that debt, and the interest upon it, was not due until the matur- y of the bonds in 1895. Commissioner Littler. 1897. The Witness. Yes, sir. We had the present worth of that figured Py and we said to the Government, '< We will go to our stockholders nd we will get this money and pay this off." We could not have made fairer proposition. Commissdoner Anderson. No ; but you might have taken care that iie public heard of the proposition, or that it could be found in some f the records of the Government, or those of the companies. The Witness. I presume it is in the records. It happened a great rhile ago. It was at the time of the pendency of the Thurman bill. Q. In what year shall we look tor that offer t — ^A. I could not say. should say about 1878, if that was the date of that bill. Mr. John F. Dillon. It was passed May 7th. It was discussed the ear before, I know. Q. Do you think you went on personally to Washington and made it 0 any members of the committee of Congress f — A. Yes, sir. Q. To whom do you think you made that offer t — A. I think I made t to the Railroad Committee, or the Judiciary Committee, or whoever rere considering the proposition. It was also made to President Grant. Q. Do you remembBr the name of the chairman of the committee t — L I think Mr. Edmunds was chairman of the Judiciary Committee^ ir. Dorsey, chairman of Railroads. I do not know which of them was hairman. Q. Then you would know of such off'er, if it was ever madet — A. I ay that it was made; I made it, and Mr. Dillon. Commissioner Anderson. It may have been ma liorhood. i JAT - GOULD. 513 Were yoa dowu in the same building wliere the meetiDgs were —A. I think I mnst have been in my own office. How is yonr office situated with relation to the offices of the com- , or how it was situated f — A. On the same floor at tliat time. With communicating doors t — ^A. I think the office was 80 Broad- YeSi sir ; they had communicating doors. Do you remember being there during the time of these meetings t — presume I was there. nmissioner Andebson. T&ere was a meeting held of the Union ic, Kansas Pacific, and Denver Pacific, all on the same day, if I mber aright ? 3 Witness. Yes, sir. What gentlemen did you see while you sat in your room t — A. I \t remember that I saw any. Were you not informed, from time to time, as to what was going these meetings ! — A. No, sir ; I was not. Did you not take any interest in the progress of the proceedings t — 0, sir. Did you see Judge Dillon during that time f — A. I probably saw )oth before and after the meeting. Do you not remember that he was there quite a time that day t — 0, bir ; I presume he was, though. Do you not remember seeing the articles of consolidation in his sY^'A. I have no specific recollection of it. Did be not talk to you about the matter and have the articles of >lidation with him and say that he would go in, or had been in, and 1 read them to the meeting t — A. No, sir ; I do not remember that, uld have been a natural thing for him to do, but I have no 8j}e- 'ecollection about it. Did he have a deed of conveyance to pass all the properties of companies over to the Union Pacific Eailway, the new company Y — do not know. nmissioner Anderson. You have told us that you were consulted :ard to some of the matters that were put into that deed of con- ice before that date. ) Witness. I have said that. amissioner Andebson. I so understood you, that when he was riDg the deed of conveyance he saw you and consulted with you some of the descriptions of the properties. Witness. He might have done that. 1 have no specific recol- 1. I suppose he knew what was necessary to do and did it. Do you remember his showing you any of those papers during that -A. I do not think I ever read them ; I supposed they were all md took it for granted. EESIGNATION. 1^0 prepared the written part of your resignation — the part of re your signature ! — A. 1 presume I wrote it myself. I am in the yf doing that. )o you remember the fact of writing out that resignation your- -A. No, sir. I remember that I resigned, but whether I wrote cument or not I do not know. It will speak for itself. Vhere is that original resignation f — A. I do not know. It most aie. missioner Andebson. Mr. Mink, is it with your papers t Mink. I do not remember it, but J presume it ought to be on flla le papers of tho secretary. J3.P B PACIFIC EAILWAV COMMISSION. t ^ Q. Do you ruinonibor wUcreyoii wero wlicii yon eijKUvd itt — A. Ipnv Pttinio I WJM ill my oftiw. ' Q. Do you rouiunibcr wlictUL-r unybotly wtie prtaojit T — A. So, itif; I ilo not Q. Do you thiuk you itutdowu of your own uccord inyourowaoffiw, without couferriug with anybody, iiiiil wrote out tbat rosi^alioii 1—A, I nmtle up my miud that tlio uiutUT wa^ uom|)licut«<« wrote itt— A. Verylikoly. Q. Had Lr not told yuu tliat it was not desirable tJiat yoti »liunlil iiold the position of director while you were dealing with the twmpiuiy!- A. No; it wonldnot be ne>CM3»sary. I should notaitk hlin ibiiltinwtiiKi. 1 knew it Q. What did you do with the resignation after huvingwrittt-u i^all.l Kigned itt — A. I liled it with the president or secretary of the coni- l>any. Q. When you say you filed it, you mean you pineed it iu bii! haudt- A. Yes, air, Q. What did you say to Mr. Dillou when you liuudt.>d in this TMiga^ tionT — A. I do not remember. Q. What did he say when he received it? — A. I do not remeiubw that I handed it fo hiui. 1 Imiidcd it to cither him or haudeil it iQU> the of&ce. Q. Between the time that you disposed of tliis resignation aiiHtion ni' coiiKdliilulinii, iiml Imw it huultl be done. Q. W)iat 1 luuaii partieulitrly is tliii: iielbro tliu 1IHL ihiy ul' .tiiiiii- r>'t 1880, wiion you resigued, tbei'c hatX l>ecii no burf^uiii iimdt^ li.v 'hicli it bad beeu agreed to jiay you par for the bondw of tbeSikiiil osepli iiud Western whioli you had there! — A. No, sir. Q. And tbere bad been uo bargain made to pay you pur fov tbc Kan « Central ! — A. No, sir. Q. And no bargain uiado to pay you $239 per sbaro for tbe IJiiiuii 'acific Central Branch f — A. No, sir. Q. If that be the price, and 1 believe it i». And the wbole of Ibat aDsaction was consummated afterwardsT — A. Yes, sir. Q. And tbat was eonsunnuutcd at tbe interview that you biwl witb the lostou people and Mr. Dillon f — A. Yes, sir; 1 prepared a Btatomeiit f tlie cost of that Central Branch, tbiuliiug yon might want it. 0IB0mi8TAKCE8 ATTENDING IlESIGNATION. Mr. UoLUES. Let ine make a suggestion to Mr. Gould. Do you re- lembcr, Mr. Gould, going out West a short time before the lUtb of uiDary, and whether or uot tbat vaa subsequent to an interview with le Boston people at whicli tbe baMis of the consolidation was discussed, Dil they declined tbe projiosal which you made, and your relationH itli them were somewhat abruptly tfrminated; and that you then cut West, and it was after your return that this resignation was made, ad that tbeu the Boston people came over and tbe interview of tlie Ith took placet I only mention it to jou to see whether yon recall iiose tranBsctious. TheWlTNESS. Yesjsir; I recollect going out West; Iwentoutover le Missouri Pacific and the Central Branch. Mr. QuLMES. Before that had you not had an interview at which the irms or basis of tbe proposed oonsolidatiou, as suggested by yon, were efliBed by the Boston peojile T The Witness. I do not know but tbey were; they were at first. Mr. Holmes. And that, after your resignation, the interview' was iDght which resulted in tbe interview of tbe 14tb of January 1 Mr. ANDEKaoN. Do you refer to anything that was of record any- rheret Mr. Holmes. No, sir ; it is only a recollection of the result of tho vu- ioDs couversations I have bad about these matters about which I knew ithingat thetime. The Witness. It is very hanl, yon know, to recall all tbe details ; I we had BO many of these transactions going on all the time tbat I do )t charge my memory with tbenu By Commissioner Andekson : Q. When did you tell Mr. Sage about your resignation I — A. 1 do not unember ; I talked with him very freely, because I met bim often ; and prennme I told bim of every step tbat 1 took. Q. You knew that this resignatiou was to be presented, as it was, in to meeting of January 24 by Mr. DUIoii ; tbat it was to be reported to te board f — A. I tlid not know that it was to be reported to the boanl t ail; the resignation takes effect whenever it is Gled ; but the action r tlie board is uot of any consequence. Q. I do not say it is, but I presume tbe board may be interested in Dowing that a prominent director had withdrawn. Yott.'««,Ye,B.'jj«.'s*,on,wlieii,a8aniatt(>r of fact,you were toliu elected a dirwlor of tbo new euinpany within an hour or two ! — A. I )in«ume that i»r halts the board of directors, out of over caution took painxto AU!«ptliiii rmgiialioD, but that is only a Bunnise; I did not ask that, bucatuej considered that when my resiguaUon was made and siguod and 6Icil In (bu archives of the coiB[Miny it was a completed Irausactioii, nufl I wiu nu loiigvT a director. i). U it uol your opinioB that the object was to make it appear tmtlru yfuril that ut the tiiH« of the trausacUoii relatiug to the bnuK-hea mil tlio fixiu^ of the terms for thvsp pun-tiases you Were nut a direcUir uf k nxniuuiy t — A. 1 was not. ', l>u yoa not know tltat that wait the object io puttiui; this befuni '' d t — A. I tlo not know. I made mi request of that sort. THB OOLOKUm caUITRAl^ U. 0>B fOK explain tbe motlT* tar tbe oetion that the board took m iMMMtalv after aeeef«isK jrtnr teripiMiai] with relation lo a pruiNwi' two of too Colnrado Oentnl BaBrowl Uumpaoy to thia caiiy [Ik I'lUoa PmUo BkOrmI] tocMeel mad anBoI the leaM; uf date the iTUi and SOUi days af FMtnatr. isnt— A. Xo. I do not kuow anythlDK abetttU. U. Had Iha B«aM>h< «f thai Ibho any iIudc to do with the euiwli- AtttMaAdtteafMMiMoflkeraaiAI— A. I ilu not reiueuber. Idosot kM« tw* il voaU. WkMhawvasii! QlBBlllimi AMM Mt. Tha lean of the Colwulo Ctolnd iWl- hmA Oaavaaxtolte CalM PaoAc, vkMvtar tlwOolotado CoBtnd Oaih^ C;r hMri te Km «r tMi JB OriMBda aod WroalAK to this ti» «em oTMte j«m iteMa MBt «Mi Tte WtiaoBBK. nioK Bicki han bcea Ian a«itoM eaMlMMtat r^nBrl «r CMvetiBC iwia, Mtd tUa BisU Wv«hn«apneMMlHMyi«» m Bt to »• dM ^ew «aa a lav ia CaiataAa thai tMj nilraad, on- =. L_ ,_ _ Ulmt witk MiArr road that WM tk* D«an« PadSr «< that ieg^n- dArCMMsfcOMzallGMML fkm fafedel ci|M tkora. That vaa mbiUr tlw oMeK ar ». idthNi^ 1 anw taitw aiQAiiC ahoM il betec <^ Wi :iM |jw« IIM th» ■qwrt «r Xt IMc* «i>' Mr- Hawiihi^ "Ti >Hii«twi»ii>i ihaaiMiih^LTr 1 1 4» ■« *ak 1 did. ]pr~ taiMiaili, 1». Wfc* ha* Hii*« t> ?^a»aM athaatk^imo giilClx - "iwili^ 1 1 1 1 1 ■!■ i[^-^t- I ^a M< h— ^ ^jiii^ ahatM- JAT com.D. tue at all. I never had any conversation with t]iem aliout their rc- ■t. The consolidation was based on the preliniinnr; agreement which ad made with the Boston geutlemeij. }. Still, it was made on the same basts, as to the exchange of stoc was contained in the reiwrt! — A. Tliey never had any infarmatid Di me in regard to that. That is, Mr. FTiimiihreys and Mr. Budgr id not know what tlieir report was to he. commissioner Andkbson. Their reiiort is in n letter addresaetl 1 k vith other parties, lie Witness. I suppose that they Hied that at that meeting, audi ae up at that meeting, and was rend to the boanl, and I, not bein|m ector, did not hear it read. lommissiouer Anderson. The iHiport is dated the ICth of JamiM, 1 is in tlie form of a letter aililressed to you and certain other gent) D in answer to a letter signed by you. fbe 'Witness. Yes, sir; as a director. But I had ceased to bo a ^ lor; and the natural course of that report would bo for that coi ttee to file it, and at the meeting it would come up aud be read | iBe directors that were present. They gave me no copy of it. t. I hand you again a copy of the letter which I think you have s fore, and call your atteution to the fact that it is not addressed 9 i gentlemen as directors, nor is the letter to the examiners of tW id signed by the parties signing it as directors. Hie Witness. It may not have taken that shape. That wonid have tn the natural course of it. The record ought to show whether that I filed and read or not at that meeting. i. It was read at that nicetingT — A. Yes, sir. '. My questiou was whether you knew it was going to be reatl at tlM " gX — A. No, sir; I did not know auythiiig about it. HSTANCES OF THE KANSAS PACIFIC CONSOLIDATION. I^ppears from tbe miuutes that the president thereupon pre- ited the articles of consolidation, and that after proper action thej' re Accepted and eseonted. Did you not know that that was going Dedone at that meeting f — A. I supposed that at that meeting, if > directors ratified the consolidation, all tbe necessary steps titr'' insel advised to be uecesaary to perfect that consolidation would * ried ont. i. Do you not know that that meeting was called for that very pt |e t — A. I presume it was, but I do not kuow that it was called for It purpose. I have no particular recollection about the meeting. 1. How soon after the articles of consolidation were signed were you Iraied of the fact! — A. I must have been informed the same day Br the meeting. |. Did yon then take your place in the board when the board of f he f- company convencdl — A. The records will show. I do irot rw- Mber. Spmmissioncr Anderson. The records do not show, [he Witness. Then I presume 1 was not at the meeting, Sommissioner Ande&son. That does nut follow, because tlierecoi not show who were thenj. You say you " then prt«ume." ?he Witness. I say the rccorils would show whether I was there ing for I 518 U. S. PACIFIC RAILWAY CO^fMIflSION. GommissioDer Andebson. The record simply Bays that they— Reassembled at 3.30 p. m. On motion of Mr. Dexter it was — Voted, That, whereas, this company had luiited and consolidated with the KAiiaai Pacific Railway Company and the Denver Pacific Railway and Telegraph CompMj into the Union Pacific Railway Company, that the stock books of this company 1* closed. The Witness. I was not at that meeting, of course. That must have been the flnal meeting of one of the companies that were to be merged. Commissioner Anderson. No, sir ; that was the meeting of the child that was born at 3.30. Mr. John F. Dillon. Oh, no; you are mistaken. It was the same meeting. The Witness. It says it was an adjourned meeting. Q. An adjourned meeting of the Kansas Pacific or Union Pacificf- A. An adjourned meeting of the company, whichever it was. Q. My questions address themselves to the meeting of January 26Ul I was in error on the other matter. My question is, whether you were ])resent at the meeting held January 26, 1880, the first meeting of the Union Pacific Eailway Company! — A. I should say I was; but the records ought to show. Q. Do you remember what action you took in regard to the articlee of consolidation? — A. No, sir. Q. I read from these minutes, as follows : On motion of Mr. Gould, seconded by Mr. Sago, it was Jiesolvedy That this company aBScnts to and accepts as of January 24, 1880, the ar- ticles of union and consolidation of the several companies out of whicli this company was formed, and that the action of the president in signifying his acceptance of micli articles is hereby ratified and approved. Do you remember moving that ? — A. I accept it. Q, You are satislied that you did move itf — A. Yes, sir. (J. l>efore makinfi: that motion, is it not true that you would have in lorined yourself of all that had taken place on the 2Jrth, before in(»viii}.' to eoiiiinit the uew eom])aiiy to a ratilieation of what had been doiu*'- A. Y"es, sir; undoubtedly. Q. 8o that at that time you had informed yourself, either from tlio reeord book or by eonversation with I\lr. Dillon, and other «xentleinen who were ])resent, of the action taken at the various meetings of tbe Union Paeilie Kailroad Conij)any, of the Kansas Paeifie IJailroad Com pany, and of the Denver Pac^ifit^ llailroad Company, lu^ld on thel34tliol Jannary, 1880? — A. Y(\s, sir; I was fully ])Osted. I talkeare yonr resi<»nation as a director in the Kan.^is Pj»* ei(ie (voni])any at tliesann^ time that you prepared yonr r(\si. Wliiit was th(» object in n\si<;nin;»: from the*- Kansas Tacilic ■— A. I was to (leal with them in the tirst instance. I was sell in quick and says, " I move thaf^ to )Ose of the business. A man who has a great many meetings has to 71 to facilitate these things. Otherwise you get in a meeting and e to sit half a day and discuss it ; but some one comes in who is in nrry and moves quickly; then the business is done up. J. i)o you think you talked this matter over with Mr. Sage two or ue days before 1 — A. Oh, no ; that was undoubtedly the reason with , Sage, lie had a great deal of business on his hands, and his time aluable, and he was anxious to turn it oflt' so as to go at something 3. I never mentioned the matter to him, except I told him that I I resigned. J. You had told him that you had resigned, and probably explained him the motives that proni])ted you to resign ! — A. He knew that rfwjtly well. I tohl him that this matter had got into shape where I lid not act as director. RU. F, PACIFIC RAILVAT COXXtSPflOH. ^^^| Taor fitatina, « I Willi ilMil it. villi Mr. Saee, wtm^^H r ■«• attaatt or 6«» Oaa wUb UT or those other geod^^^l nc«-^A. I ■■ ■■ upwBy ftee with Mr. Pffloo. ^^^1 Xr. DOlM sad lb. Si^ toeether RpfBacBUil tboee wbc ws« bM brfaened of vhat J«B «m rfaiac* *od *>>• M^rfa* kaa( naiWiLlii, W— c» aitk Humtduniil) Ami thcB fcBai a BM ef the bcaoA Usee auld by yoo. Dn m kaov vhac Hil DOm lUUiiiil to vbes he end that the cuDpoii} Ul -ka^ht OMe alaeks Mi bM^ t The Wrsssb. The rMiiii PaeOet CaaanMao- AXDKKMKS. Tea. A. I MMMai be leftntd ta the agrmaeat thai ihcy fand aude witli I aade vidi yoal— .V. Thai tlwdj' thai tben ia aoeaur on thv booUtiUht tmtmMifn^mtwmj actii by aay (UMwtitivv oomniilt«e liaBof aaysacA parehaae; nt that eorrwt T Of »^« II ail him I t. Ortha faith Mil ofyoor bnutoh line. A. IdaaalkMW Q. Wa h^a iiiaalirti flha heato aaJ Mr. JUafc haa exMBined thwn, ■live tei aanABiBeataiL With that explaoatioii, wbnt dajron aatoMaai Ms. VUm •• tcfrr to «bta he tays that tbf> coaipao; hal boacht tfana kMBCfe Gaact-^A. Idaaotkaov. Q. Dayoaaat CfaiakbeTCARi4 tatheafnemeut that wm uadolv t«i«a yoa aad theaa BaaBaa eeathaca and Mr. Dillon and to the iniKT that yaa fai« Mr. I]axterl--A. That voaU be ny uppositioa. (^ Dew that p^ar a^^ert t* be aa agmiaitat betTt^n yaa m\ " m\~A- I tiaak A vaa aa acneawot vith Iba Kum* ithiakao. .'. other tbaa aoob tM wa» dnrlrvd thai the gtaOtawa uaayiKwag aiih yon mvtv Mnctatof , ft* ifMJdiag it aa a Uafiac oorporatr artmn t— A. So. ibuik that tbiqr««teba>a4 biyii .11 all nmil ibt-yMtfll tbfiy eaaM .-t it. .\icncBscQ(. neflgaican^Kini lacnv wh the ftfareayea havr ^' M naiq bavr bom iaelix Ha.T 11, l!«iS.aDd f^- JAV OfJULD. — « Pacific bonds ($1,750,034.23), togetbor with second mortgage bonds of the same company ($24,700), and the Saint Joseph and Denver City receiver's certificate (459,000), which api>ear from that letter to have been received by the Union I'aoifio Railway Company from Mr. Uould Rggregate the total of 01,833,724.03, which amount appearH to agree vitb tbe entry appearing on the minutes of the meeting of the KansaH Pacific of January 24, 1880, indicating tbe nmouut of tliese eecnrities referred to in that resolution. I aak you to compare tbe traniMsript from Uie minutes with Mr. Mink's tetter, and state whot>her tliose accurately represent tbe securities actually transferred by yon and emliraoed ID that adjustment. The Witness. 1 presume this is correct. APTEBNOON SESSION. JAY GOULD, Ijeing further e:iamioed, testified as follow* : SAINT JOSEPH AND WESTEBN BONDS AND STOCK. By Commissioner Ajojebbon : Question. Will you please explain why the amount of Saint Joi bonds stated in tbe first item contained in the letter, after $1,750,0^^ differs from tbe statement you banded to us the other day of tho amount of the«e securities bought by you, and which footed np$l,C62,8Sfl.9.S! — Answer. 1 presume that difference would be occasioned by some of onr IHends bringing in bonds to me to make tbe exchaugo. For instance, I see tbat Mr. Perkins bad some bonds. He was the president of tbe IinportcrB' and Tradors' Bank. Mr. Buei bad some. Q. Who was Mr. Buel 1 — A, James Buel was at that time preaident l>f the Imimrtera' and Traders' Bank. Mr. Perkins was tlien tho casliior ; ruid since Mr. Buel'a death be bas become tbe president ; ami other lots might have come in in tbe same way. All the parties that 1 kuew of who had bought them through me, 1 naturally gave notice to, and thoy probably sent in the bonds, and 1 made the exchange. They wonldiiot go through my books at all. ■ Q. Then your recollectiou is tbat all tbe parties who had bought these ^nds through you were included in the delivery made to the Union jPaciftc Itailway Company, according to tho contract or amingemcnt nade by yourself by which these bonds were to be sold to the Uuion j^sfiific Railway Company at par ! — A. Yea, sir. Q. And tbe aggregate, as stated by Mr. Mink, you accept as donbt- less correct I — A. Yes, sii'. Q. Ill Mr. MiuU's letter it is stated that tho amount of Saint Joseph vbA Western stock which you turned over to the company, consisted of 6,162 shares which were turned over at 20; and in tbe statement which ! hat] fbruiahed us, it appears that you haears to include both those that you retaini^I and those that you had conveyed to Mr. Sage aud Mr. Dillon. The Witness. Yes, air. Q. Do I assume correctly that you turned Over both their hondu and your own in this transaction ! — A. Yes, sir; I sold them, re8er\-iDg Ihe right to manage them. Commissioner Anderson. The amount of stock of the Bridge Uom- pany is stated both in your report to us and in the letter of Mr. Mint at 4,000 shares; aud that, therefore, we will assume was the amonutof stock which you turued over. The WiTHEss. Yes, sir. Q. We will take up the Kansas Central now. Have yon a statement of the time and manner in which you acquired title to $479,000 of tlie Kansas Central bondst — A. Tes, sir: I bought them of Mr. Garrison at the same time that I bought the Missouri Pacific. (j. Are the two papers which you now hand me a statement of tlint tnmsactionf — A. The first statement is a statement of that. The otlior is of the Central Branch. Q. The statement you hand nie is a statement of the parcliascs !— A. Yes, sir; the cash cost. The paper referred to is marker! " Exhibit 5, May 18, 1887," and is « Uowa: JAY GOULD. 523 Exhibit 5, May 18, 1887. Kansas Central Bailroad stock and bonds, Nov. 13,1879. Bought of C. K. Garrison (385,000 bonds, at .80 and int... $310,992 47 Nov. 13, 1879. Bought of C. K. Garrison 2,521 shares of stock <...-. 45, 000 00 Nov. 21, 1879. Bought of L. T. Smith $44,000 bonds, at .80 35. 200 00 Jan. 6, 1880. Bought of L. T. Smith, on account, |50,000 bonds, at .80.. 30,000 00 Jj|n. 27,1880. Bought of L.T. Smith, balance 10,(527 78 431,820 25 Tota], 1479,000 bonds and 2,521 shares of stock. Jan. 24, 1880. Surrendered the above bonds and stock in exchange for 4,790 shares of Union Pacitic at par |479,000 00 Denver Pacific stock. Dec 17,1879. Bought of Arapahoe County 1,000 shares $100,000 00 Jan. 24, 1880. Surrendered the above in exchange for $86,500 Union Pa- cific G per cent, bonds ; $13,500 Kansas Pacitic 0 per cent, bonds; total, $100,000 100,000 00 Cominissiouer Andebson. We understaud from this statement that yon bought the bonds of the Kansas Central at 80 and interest; the amount paid for $385,000 of the bonds being $310,992.47 ; the amount paid for $44,000 of the bonds, also at 80, being $35,200; the amount paid on $50,000 of the bonds being $40,027.78 ; and there being also paid for 2,521 shares of stock of this BLansas Central Company $45,000. So that your total purchases aggregate $431,820.25. The Witness. Yes, sir. Q. These are the same securities that you turned over to the Union Pacific for $479,000!— A. Yes, sir; $479,000 in stock; not cash. Q. Yes; $479,000 in stock of the Union Pacific Railroad ?— A. Yes, sir: that stock would not produce any more than that. Q. You say you bought these bonds from Mr. Garrison ? — A. Yes, sir; I bought the first purchase of him. The subsequent bonds I bought of others. Q. Some were bought as late as January 27 ! — A. Yes, sir. I bought none of Mr. Garrison after the purchase on the 13th of November. SITUATION OF KANSAS CENTRAL. Q. Where was the Kansas Central ? — A. The Kansas Central was a road that ran from Leavenworth west. I will mark here on the map, in blue. That is the Central Branch, as it existed then. TAi« was the Kausas Central, aneing Rtateil at $100,000; the ttnmn being Biiparently Ruriciidcred iii t-xnbaiige for $SU,500 trnion I'adDcfl per c«iit. bond)), and 4'1>%GOO KaUHat) I'aciflc (i jht rent, cunnoliilattvl twDds. Th» \VtTNiC8S. Yen, sir ; tbat was jiint exantly what I paid. Q. By whom were thoiie bondn delivered to yoni — A. I donotlIrHKr■ Mr. Ham, I thinV. tj. Ily what corporation, I mean, were tbey delivered ! — A. By the Union I'acilU:, after the conxolidation. Q. The ntock was exchanged on these term», od the 24tb of JanQHr)', 1H80, as stated here!— A. Yen, Bir. i}.. Wax this the entire negotiation with Arapahoe Oouiity, or won other matters iuvolred ! — A, No, sir; the only other matter thfttvat involved, as I explaineil yesterday, wa« tbat the county Wiiiittsl m to pay something for the stock rather than to foreclose tt. Tbey tlmnciit their people would feel better towards t lie company. 1 asked tliern bnw much they thought tbey ought to have, and they said fiIOO,R(lO, anil I paid it. Q. Were there not some other Iwnds included in ibat tnuisautiou )-. A. No, sir. i.t. lioiidH. JAY QOULD. 525 |. Is the pai)er you hand lue the origiual contract t — A. Yes, sir. \. What was Mr. Oliver Ames's relation to any of the other Ameses ,he time of this purchase f — A. He was outside of them, running on own hook. l* What relation was he to Mr. Frederick L. Ames f — A. He was a sin. J. Had he any interest or connection whatever with the Union Pa- is or the Kansas Pacific f — A. No connection with those roads ; no, I. Was this negotiation conducted in New York t It is dated New rk. — A. It was conducted partly in Kansas and partly in New York, ad the Kansas Pacific, and the Kansas Pacific had a branch called Junction City and Fort Kearney. We came together up in the tbem part of Kansas. They were building west. I said, " All right ; ill build ;'' and so we were building two parallel roads. After I got about 20 miles they came on here to see me, and when they came on e .1 bought the road of them. j. Who came on here f — A. Mr. Ames and old Mr. Pomeroy. Mr. neroy was the president. They wanted me to go out and go over road. I went out, and I was wonderfully impressed with the amount »usiness. Afterwards it was said that they kept the freight back for eek or ten days, so that it appeared large when we got up there. I a freight train ^^ nosing" out at every station, and sometimes we to wait to get by. But I bought the road. [. You appear to have paid for the 7,610 shares of stock $1,826,500. hat correct f — A. Yes, sir. :. From whom were those shares purchased by you f — A. Mr. Oliver es. Not the one that was connected with the Union Pacific, but rer Ames, the ])resent governor of the State of Massachusetts, acted he mouth piece of the stockholders. I made the contract with him. re is the contract [handing a paper to Commissioner Anderson]. he contract is marked ''Exhibit No. 7, May 18, 1887," and is as fol- AMES AND GOULD CONTEACTS. Q Paclflo Railroad Company. President's office. Sidney Dillon, president, 78 Broadway. Post office box 4167.] New York, , 187-. morandum of agreement, November 7, between Oliver Ames and Jay Gould, vet Ames sells and Jay Gould buys sixty-two hundred and fifty snares of tbe capital stock of one million of dollars of the Central Branch Union Pacific Rail- Company. The price paid is two hundred and fifty dollars per share of one red dollars, amounting to one million five hundred and sixty- two thousand five red dollars ($1,562,500), payable one-half in the Union Pacific bonds and one- n Kansas Pacific consolidated bonds. ^ Gould is to have the control of t^o board. 68 reserves the right to extend from Kerwin to Logan one-half of the profits to ' Ames and Gould also on same terms from 6candia to State line. leased equipment to be paid for at cost by the company. OLIVER AMES. JAY GOULD. Was this amount actually paid by you to Mr. Ames in money I — fo; I paid him in those securities, I think. Does not the contract ify itt I took my pay back in the same securities. »mmi8sioner Anderson. The statement that you hand me, I And, rs some additional purchases besides those indicated in the con- jt le Witness. Well^ they are all in those subsequent ^^outtaata that ided yon. i 0. I'ACIPir RAILWAY COMMISSION'. Thn witdcvs )in>8«iitA a uuiiibcr of cotitmcts antl bills fur whlitiaual |inrcbaM.-8 or IJiiinii Pariflc, (Vtitral Kraticb. Ktock. Tlif-y arc an followa; OUVKK Amku, Kw).: In attrfitJon in mt pnrchiiBn of 6,2&0 nhsmi uf Cuutnil Bruioh Uuiun IWiHb riocL iM p«r iMDtraot I wiiriake 1.0«0 i4i>mi >l -JOO s-id l.OUO ul t7E-, pn]-*blo In Kum FkIHi' mniinliilatfl liuudii ut p»r. JAY r.Ol!l.|). :. oliurrn ut :«», ta5,01W. Jajl (iottJ ti> Ufirrr .lou'ii, />r. l^)t piircUnsi! »f 4*5 nhnrui uftbe Ceiitriil Itniiicii Df Uit> Cuiuii I'aciOi* Uall- rniiil Compiuiy, ut WO |U6,iiiiy, 1112IMJ |Ul,(lijil OLIVKR AKK8, •mJ«^lJ, IK71I. •/ajr Irouid lit iitirer Jn«r. for )iiirrliMH(irMncI(i>f IboCniilral llraiiuli uf llui I'uiuii Padflo l:allro>il, ntlflX) ^m OLIVRK AHIK Nkw York. Xovimber VJ, IST!). NUVRHDEB 10, 1^. ' riMVKii Amkh, EHq.: I will tukcof yoiillHi iviiiBhiiiinl,'?.'!! ..Iihii*. iir any imrl Llim'of, M IM, [uij»lilHliiir(.'HCi'iiIru] Uriiimli lliiiuu Povifiu xtuvk, at QOU fe6,(O0 :tlU! nliun-R Cotilriil Bniiiuh lluiuii fM-iflu Htouh.nt ITS M,m tO,lM Ibioeivml RnuHDa Puoiliu ooiiHollitiittxl bumlH 0,800 Duo itto in Kttns4iH I'dUlUu buiida , SO OLIVER AUm. Q. The aggregate of tliose coneiata of the flgurcH contained iu jfior nUtemeiitT— A. Yes, sir. Q. Were itll of tbese payable, oue-lialf in tbe Union I'aciflc ImidiU, and nno-balf bi tbe Kansan Pauiflo consoliilateil boiidMT — A. Yea, air C0I.L4TEEAL TRUST BONDS. Q. WUat is referred to by flio ezim-sBiou "new U^loii I'adllo ' , I presume tbat referred to an isaan of the coliatexal tmrt kof whioli [ was speuifying the xecurities which I nwnerl. J were securities that had been iasuod before that Uinel— A t, silr: they had been issned, and 1 owned them. J idontlfy them a-^ " collatwal Uait bunds" t — X. Yes, iiir. JAY GOULD. 527 Q. Then this stock bought by you from Mr. Anie8 is the same stock hich is referred to on the niiuutes of tho meeting of January 24 as aving been transferred by you to the Kansas Pacific Company for 1,826,500, to be paid for, one half in Kansas Pacific consolidated bonds t par, and the other half in Union Pacific collateral trust bonds at art — A. Yes, sir; at just the price 1 paid for it. I think I ought to ay that in putting in the Central Branch and the Kansas Central, demurred to that, because it would look like robbing the Missouri ^acific; but Mr. Ames was afraid that they would be extended into Jnion Pacific territory, and we finally compromised by an agreement ►y which the Missouri Pacific would take the lease of the roads so as to ecure the business from them, and the ownership should come into the onsolidated company. The Kansas Central was never formally leased, Ithough it is embraced in an agreement. And it was on those terras, ubject to that condition, that I sold them. Q. Were' these purchases made by you with any relation to your im- pending purchase of the Missouri Pacific! — A. No, sir. The Kansas /entral was the property of Mr. Garrison; but the purchase of the Cen- ral Branch grew out of a fight between the Kansas Pacific and the Central Branch people. I bought that before I bought of Garrison, a ew days. I just got the thorn out of my side on the north, when Gar- ison turned up on the south, and I met him then and bought him out. Q. You say that this project for a lease to the Missouri Pacific was abstantially agreed upon, or was a part of the arrangement that was lade between you and these gentlemen from Boston, when the con- >lidation was finally arranged for? — A. Yes, sir. Q. And that lease was prepared and ratified at this meeting of Jan- ary24f — A. No; I do not think it was. I think it was some time ibsequeutly that that was taken up. LEASE OF CENTBAL BRANCH UNION PACIFIC. Commissioner Andeeson. The minutes state as follows : A like draft of a proposed continued contract for a lease of the Central lirauch nion Pacific Kailroad and its leased lines to the Kansas Pacific Railway Company as read, and, on motion of Mr. Cammack, seconded by G. M. Dodge, it was — lieeolvedf That the president of this company execute the said contract under the >rporate seal of this company, which was then and there done. So that the first proposition appears to have been a lease of the Cen- "al Branch to the Kansas Pacific. The Witness. I do not know about that. I do not remember about Q. Was that in conformity with your arrangement about a lease to le Missouri Pacific f — A. Yes, sir. Q. Do you remember the fact that the branch line was first leased to lo KansaB Pacific ? — A. I do not remember that. I was not at that leeting, I think. That was probably a form gone through in perfect- ig the consolidation, and then, afterwards, this arrangement with the [issouri Pacific had to be carried out ; but I do not know the modus peranili about it. I know the fact. Commissioner Anderson. Shortly afterwards it was arranged that tie Centred Branch should be leased to the M issouri Pacific and operated y it! The Witness. I sold it subject to that right. O. And that was carried out f — A. That was carried out. gpp fz. iL rtcfnc EAiLWAT Cfjaaamos. U, Awl tW XuMwi rjofieb«ias»tfcaitiMvo|ientMltberaul)-. A. r«»,tit. <^ Tb« yeaccal Unas bone tkax lUe icai to be paid is tbn outtn Uvt otraiiiiEKaf tbenadt—A. Vs,tir; tte eatire net auitiBpi < J (lie itiad. 'o )'oa kDow wiietber the amooBt^ {aid over by ih« Uianuh I'HCific for tb« yean 1880, 18SI, Ib&i, suid 1SS3 «ere SDOlcl^itt to m; the Q^-'l rlirirj^i^ and leave anytliiog fur divideadnT — A. 1 douulbnov wli' " ' r. The figures will show. I know ttieeaniiup<,ur Wfii ' reaiiiiig. <; . ~Liat rt»d over (o the UoioD Pacific p^-ojile at Uw I>n>' - j>-oQt $:^ |>er share, did yoaexamiDeiiitoiisUnao. cUil fii'liliKii 'li.-'ti'lyl — A. Yes, sir; jireHy closely. Q. Dill you make ap a balance »heet sbnwing tlio amomit of its Oimi. mid iiiiiKlitedrivi^, n« compared vritb the asseuf — A. Yes, sir, (^ l>u yuu ruiuiL-niber whether such balaucu sheet showed iU gcnenil iiicutne u4;eouiit to be deficient by over a milUoD dollunT — A. >'o; lilu not remember that. Q. in exajniuiug Huch balance sbeet,didyoacaa8oUieitiduUednf8iUi the Goveniiiieut aud the arrears of interest to be inclndod T — A. I pre- HUinc »o. The Govemmeat had do lien except on the first 100 wiles. There were 3ii8 miles of road. it- The 100 miles in question form au Integral jiart of tbe rai)rotul,ilii tlmynott — A. \e8; tbeyform an iiitegral part of tlio railroad, and Uicy held llio otlier t'oatl, under a lease, for the iutercxt on tlie boiidK. So that, praclically, tbe million dollarsofstoukof the Contra! Branch eovtin nearly 400 milen of roail. On the balance of the mad tlie llxe, wcoDdod by Mr. EdEerton, it was — d, Tbut &,'ii2 aliarea of tbe authorized capitut stock of thia comimuy mmai bsoriliud and uniaHued may be isaiied, and tbe preaident and Nourutary i nthorizcd to execute certibcat«8 therefor in payment of the Itrat coupon on iltdfttud bonds, and for other iudebtcdoeaB of tbo company. a did you first learn that tbat resolution bad been passed! — A. moment. oa never beard of it before t — A. No, sir, o you know what other interest was referred to in that rcHolU' A. No, sir. nd none of tbat stock waa ever transferred to you T — A. No, sir*' eIiNk. I can answer tbat question to-morrow. I nissioner Anderbon. It appears from the letter of Mr. Mink! B transactions wo have referred to were actually carrictl into of-' the Ifith day of February following, by tbe delivery to you ' jhares of tbe -, yuii vem U) „ _ _ c uf ilifso M'imritiw! iu cuD»uli(l»t4Ml l>otidii of tin _ tCtmjmas at |«»r, ami for koidu otiivni in Union Pafittn ■HMatertkl tnrat bondo at par. Ilnw who th:>talt«reli ol tlic new compfiiiy 1 — A. I K. It niipears Troiu thn 1t:tU^r ul' Mr. Miiik I uf till* aouKitiU itpecifltil tn tlint Iftlt-r, which cnrur all tjf Ik HiooB tkat we Iwve rwfernii tu, llt4t ih. tttvor th« Suiiu Jom))>|, ^^__ iBrrrliooiI«i«niI«*opk, ibe Kiinsaa Central Kailrodti, thcrweiv«r's ^Wtiflcattn, tbr Saint .I(>««>|>li IlriilKt' twixl-s l)>« SaiuUniw-pli iiiid Wml t-m xlork, and tb« HastingB awl (>m»d Inland Itunds, the ugRKgaiuul wlikh is CJ,8.-l8, ap{>eur ti> tian^ liei^n litiiiiitatcU liy lilt- ildivrr; Iu you i>f :u,Cl 1 shorvA i>f Ktot-k. TIm? WintKKs, TIkU is i-umx-J, 1 |ir\-fMra»-. (^. Can yuu out tOati^ tbi-a. hyv the wrtun ul |^a>lneut mw. ultuisl i» that then; oliligatioAK «(-ti' tii)iiiiUii>" -T— :■, ^.-. iiiitifK UK^utittiKit in tlw nwohitiuo 1 '—A. 1 llitnk tlM*y Were hmUhI tm» ti>fy wvn: {<: ■!]»]: of .lanuary IM. mmisMuiitT .\>.' ""L :ii tlHi luinulrit uf Ji I, and ouniurv UieEL.. ■•« aMavaav «■■■■« Chi* rMipifiM Ffltr IwO jtoar aMHOllMiM the iwc tkat il Aew- !■ » •VnMlfat |OT«fdMl that the MrvMMMur .B^^ — ^.v.. .- . ■■■■^^^ ^ ,^. ^ ^^J^ i^mf^temmmm. Cte jm iril m* vhdteMr agreed tn ilelivcr toiim lliin stoiik in puyuictiL I'lir l\n-nc eontiiitkw t — A. 1 do not know. i^. I'hen, all tliat yoii remonilier to liave occurred ia the tiuit thiit tliu securities wora ileliverfd, mid that tie officera of tlw coiupaiiy were Hatiii, iDDsthavu accepted the voiitract and mftdu the imiv.l!HRO of me. Tlie Jvhuku!) Pai-iiit^ — and tlii: new compiiny, as sncceBSor to tliat— did not need any actiou. It was to rarry nut a previous agit'eHient. Q. Uo you claim tliat the new company was bound to cany out any wgreement of th» Kansas I'auiHc, no matter Iiow QuduturabK- or uupruflt- ablet — A. I think that tlio cfl'eet of the couMolidation wum to niergu the ft-antsliiacH of these eom|mni<:s together ; and, as u necesHtH-y infer- euw, that it asKUniex the debts and liabilities of the constituunt cqui- JMIliCfl. Q. Still, tliero wei-e consolidated bonds of the Kansas PaciAc mort<- ^ge iiniiMued at the time of the consolidation, were there notf— A. BR, ttir. Q. ^Vhy, iimtcad of payiii}; you in those bonds, did they pay yon in tbfK stock t — A. 1 snppoBe they thought it was better tuiiay in stock tbiiii in bonds. Q. .When you say " they," to whom do yuu refer T — A. I should say, thi! company. I). To what men do you refer f — A. 1 do not refer lo any. 1 ilo nut say thi» is I he fact. You asked meforasupposilion,or u'hatl thought; hut I haveuo rccullection about it. SETTLKftlKNT IN STOCK. Q. What 1 want to get at is, whether Mr. iSidney Dillon aud tliu other olticers of the company came to the conelusion that they would sottJc with you in stock, and did so, or whether, iu some way or other, a decla- ration of a corporate purpose was reached by which this alteration was made in the manner of carrying out this contract that had been made between y:ou and the Kansas Pacific. — A. I suppose the truth of it was that the couxolidated compauy was more couvenient for Ihem. They thought perhaps it wiis better to keep the bonds; that they were bet- ter collateral, aud would answer their purpose better ; and 1 was prottj' olcver, aud took the stock. Oomniissiouer Andbbson. The stock was not very Imd t^i take t The Witness. The stock was about 93, I think. Oommissiouei' Andeeson. 1 guess it, was higher than that after the oonsolidatiou T The Witness. Oh, it went up after the consolidation, of course. Commissioner Andehson. This is the ICth of February, the date at which you took that stock I The WiTNEsH. I do not know what it was on the Kith of February. Commissioner Akdebson. What was it ou the 10th of February I Commissioner Littleb. About 108; it is quoted, January, 1880, as 108} excuse nic, I am quoting Kansas FaciHc stock. The Witness. Yes, sir; Kansas was higher; Kansas Pacific sold up to 108 in January. Commissiouer Andkeson. We are only concerned about Union Pft- Tho Witness. I gave you the price of Union Pacific np to the 34th. erf Jaouarr in that paper I gave you. 1 i V. 8. rAClFlC UAILWAV COHMI8HI0K. Q. We are liitoreBtctl in tlie price on tbu 16tli of Kubniury when yo nfuL I refer more ]>arliculHrlj' to conrrr-' sious made at the same time that you matle yours 1 Tlio \ViTKEi>i>. They all went iu at the samo price, I lliluk. Commissioner A>uttt50K. So tbat you stated it speciHcally t your snbordiuaied incomes they were converted at iioi The WiTKE8». Vm), sir; 1 think so. FOOL HECUB1T1E8. Q. I call your altentioa to ibe statement of thii* (ninsaclion, refemog to the jKiol secoritles, as to wLieb a KiM^ria) slatenieut if made in Ibe mortgage, at tbe foot of jiage 15ti, You will find the t^ecurities thrni' ttelves 6i>ef:itied there, aiid tbe hialfjiieut made that tbe Kuunis CadDe Comt>any basatnveil to jmy forlbeiie se<:uriUes theKumof t3,4W,0UUin. c^iusotidated first- mortgage bonds. Have yoa ever ftgnred the ties tbenuH-lves at tbe eommntatioD rates towe what tbey woukl i tot — A. Soi, sir. Q. There are incloded Uiere: fJtfl.tMO vicawl laxl-ittmnt liidda. (bo oPMBOUUoa nU for wbleti waa 91^ $;^iui> fdsdod bodd^IlM raaiiiMttatiBrM«MpadUK>*- • ■ .|.Ol»ArkMMBV«IlaTfl UoB tate, ml^'xt %m cnimedan. U \m jiU.. & Ilia total MMMnal -t lbe*e wrsfiUn conpttted st lb* MBMBUlion nUa Mnc 3.WHM AX KXPULXATIOK ASKED FOB. Will you pleaae expfauo to me bow yoa reeoncne tbe stutemeat tliul IbuseMvurillea wen in &et exdksttg«d al tbe maie rau-s providul for ' ler (lersoDa io AjlicJe S3, witb tbe fiwt tbftt the mortgage states Uiot ' were to receiw tor those senuities KMMliOtKi, ibc difl'erenoe beii; ~ ^1 WITKESS. I do oot nnderslaad tbe qocfltlon; I ^t so mixed np. ^.iPiilsJoBer AXDEitsox. It ia a bmc question. There is the ooffl- ttkHi of tbe SMohtiek JAY GOULD. The Witness. Are tbese the securiiies that I put in myself I Cotntnissioner Anderson. Those are the pool seccritiea and iuclude pnr own, of coarse. A. I tiiiuk that the accountants of the company can give joa this in- inoation. I cannot. I can only tell you what I put iu, and what I (ceived. Q. Did you receive your share of that *3,400,000 of Ironde f— A, I do ot know whether 1 received my share of that. 1 gave yon a 8tutemeut r what 1 put in and what 1 received, 1 think, among those statenientK. Commiasiouer Anderson. I think not. Mr. noLiiES. It has jnst occurred to me in that reorganisation the Dmniittee of nine had expended large sums of money, and the commit- te were paid, and their counsel were paid, and, for all I know, there waa icloded in that an additional amonnt of consolidated mortgage bonds ir the purpose of paying snch moneys. I cannot remember what the act waa, but there is one clear inaccnracy here, and that is that the Lrkaiisas Valley, if they were to be taken at the mortgage rates, would »V6 been taken at par. But it seems to me a complete answer to say int that was the contract between each company and the creditors and ntstees, and required the trustees to pay this 43,iOO,000 upon receiving Hise securities. The Witness. I think it is safe to say that the lawyers got the dif- ference. I know I did not get it. Commissioner Anderson. Our inquiry is addressed simply to the bets, because you owned substantially all of these unstamped bonds ; nd the statement ma, were Ktchedl — A. No; I have no statement except of my own interest in the tatter, and what consolidated bonds I got. Q. Cave you a statement of the interest which you had, and of the >ndH which you gotf — A. Yes, sir; I think so. I prepared such a fttement. That shows it. There is the statement (handing it to Coni- issioner Anttorson.) The apparent difference that you tttfer to there lotiably aroso from advances that I made to pay the floating del>t_Of PACIFIC {Un.WAV COMumSIOK iLe KiiDSiia Pucilic, lUat in, to pay ttia iiitorefitoii (bo 0eav^ bonds to tlie 0uit«(i Suites Trust Oi)ioi>aay. Mr. Holmes. Yes, sir. Thv WiTNEHH. TliOR« boude were seveu pei' veut., auiid could juuisuutdf llu bauds of tbe receiver. On tbo 6tli or 7t.b day uf Juacs that wjw dune. Comuiissiouer Andbkson. Ciui you furnish us with any slatement « llgures or computi^tion that «an be veriflod, from which we can uwer tuiu why it was that $3,400,01)0 was agreed to be paid in couaulichitei iKtncls for those si-eurities, and I'ur such other consideratioiiH astna; bavo been included 1 Mr. IIOLUKB. I think I jiersonally linve uo sucli flt;area ; but if H. Meier, who was the ehairmaii of the boudhohlere' eouiuiiUi!^, aid Mr. JIoniBO White, who, if I reuiember right, wa« ifj* secrelaiy, bavi prtuierved their meiuornnda, tbey must have the data upon whiih IliaV iigreenjent was made between the company antl ihe tnintees; h«uiiw t'tio use of that umeh was d is the stateuient of all my holdings. But 1 rememl>er, now that Mr. Uiilini'^ speaks about It, of making some large cash advant»s as a [huI <>f tiiHt reorganization to pay back interest, &e., to get the roiul nut of tin* n^ ceiver's hands, from Mr. Villard, as the receiver. Coiuniissioner Andegson. The advances so made would be a jiart it« Itoating debt and a part of its immediate liabilities I The Witness. Yes, sir; that would come uuder the hewl af "B liilities," (U)inmis«iuner Andebbon, Those were repreacntfd iu a se|uiMt« iltHi as a part of the funding mortgage, and wore payable at luir. Stt " Ibuse mlvHuces could not possibly be includett in conHolidat«d ~ speeilied to be given in exchange for aecnrities, which are also THE "BABY BONDS." . nni.HES. Tliei-e is a special provision for tlio issuo of a b|KC iuijouul of those liouds to take up these back chiu'geit, which weni utl rdiio iutt-n'st upon tbc lionvAi*, ftwA \vv"^'>^ ^'''"' \«rt\A v-j.'vtillcatcs, wbHiIl JAY GOULD. vailed " Baby boutl^." aud tlie coupous of tbeiu. We took up tbe enver exteueiou mort^rages, fur exaniple. The pur of the boudit, wUb le interest added, uud tbe eertiticale added, luade it, if I recolleoti t,46U per boud. Therefore, oil eacb $1,(HK) boud of tlie t>ix tbousand e jtaid $HiO, aud took in their back coiipoDij and buck eertiticatea. Wv' kl the same with their bonds. So that there van a very large uiiiouot t ovtrdae debt to be retired. It wah not Huatiiig debt, because it van Mured atid there was also the HoaCiug debt, for wbit'h the fuaditi;; lortgagH bonds were held. Til© Witness. The books of tint Union Pacittc show the viholv tliiitfe', r ooaree. Oomiaissiuncr Andeeson. 1 have a.'^ked Mr. Mink, and he says thoy > not show this. Do your LH>oks slow th« cuntiideratiun received by I© KntiHtts Pacific for the $3,4(H>,UtHl of iKUida which are tipecilieally w- ured to in the mortgage at page loti and 157 1 Mr. MlSK, Not of a speeitio transactiiun. The co»sider.vtion for the 3,4O0,(HH) in bonds of the Kansas Pavilio Oonipatiy would be tlie liondtt irned into tbt< trust. That is ftxed by the t«riii» of the niortga^. Commissioner Andkkson. Was thiit the only consideration for 1,400.(H>0 of the bonds turned into tho trust If Mr. Mink. That is my iiuderHtandingof it, and the only con»ideratJOR tat there could have been. ConiniiHsioner Andf.kson. And the only voneidemtion that appi }KHi the books of the comitany 1 Mr. Mine. That 1 caunut any; I can give my understanding o ('oiuniissioner Andkuson. That eonsideration exceeUtiug to the acqni«itiun of its bra bea T — A. I do not recollect. Q. I>o you remember the purchaseof the Denver and South Parid . Yes, Bir. Q. Und you a part in that, either iudividnally or as an oQicer of t nulT — A. I think I had an interest in the construction coitlritct — iCwaA minority interest — aud subsennimtly I bought the proiierty, tJie whole ling, for the Union Pivcilic. Q. Yott boaght it from whom !— A. I liought it from Governor Ei^ ad hid association in Denver. Q, When was this purchase matlcT — A. I do not remember whed^ Q. Was the roiwl being coiistrueted shortly alter the uousoUdatinnP 1. Yc8, air. Q, Between what [tointB does the road extend T — A. It vha being eon- smcted at the time of tbe consolidation, I think. It wa&tuextend&tiin tenver to Leailville. Q. Yon siiy you had an interest in the construction company? — A. I link I took au interest, either when it started or Hubsefiuently. <^. For whoi*e account was it l>eiug built Intfore the consolidation; for iown accoantT — A. For the Denver [leople. (Governor iivans w;i8 at le bead of them. Q. What weie tlio general terms of that contract, do yoii remonil»er T Tas it payable in atock und ImudsT-i-A, Vus, sir; 1 think so. Idon ' »iiieniber what the Icnua of the contnu-.l. wiTe. " 536 n. s. PACIFIC railway commission. Q. Have you a copy of that contract f — ^A. No, sir. Q. Do yoQ remember what the amoant of stock and bonds payable per mile was in the contract t — A. Ko, I do not Q. The contract called for the issue of all the stock and bonds in pay- ment of its construction. Is that correct t — ^A. I think substantially all. They may have given out some stock for local aid, perhaps, or someUiing of that kind. Q. What was your interest ! What proportion was it f — ^A. I do not remember, without referring to my books. I will furnish you that. Q. Did you remain interested in the construction contract until tk completion of the road I— A. Yes, sir; I remained interested until the final transfer of it to the Union Pacific. Q. Do you remember how many bonds and how much stock yoa held, which were derived under your interest in this construction contractf- A. I will furnish you that. Q. Do you know what that road actually cost to build per mile!- A. Ko, sir; I do not. There was a large profit on it. Q. A large profit, as measured in the stocks and bonds t — A. Id the securities ; yes, sir. Q. When was it completed f — A. I do not remember. I think the Union Pacific completed it to Leadville after they bought it Q. Do 3^ou remember how much stock and bonds you bought from Governor Evans f — A. No, sir; I do not. Q. Can you furnish us with* a statement of thatf — A. I think so. 1 turned it into the Union Pacific at just what I paid, and their books would show. Q. Did you turn over to the Union Pacific your own stock and bonds as well as those bought from Governor Evans I — A. My own went in at the satiie price that 1 paid the others. Q. At the sjinie price you paid Governor Evans for bis? — A. Gover nor Evans had the sellin^^ of the whole thing, and I bought the whole tiling out from him. Q. All of the stock and bonds were turned in at the same price f— A. Yc8, sir; all at the same ])rice. Q. Do you remember Avhat that price was ? — A. No, I do not now. Q. Do you remember that it Avas about $150 a share ? — A. I think it was; I do not know that that was the price. Q. About tiiat? It is subject to correction. — A. It is a niattorot tigures to be ascertained. Q. What knowledge had you of the earning capacity of that road at the time of the sale? — A. I went ouc to Denver, and went over it, ami investigated it. It was earning largely. I was very much impmsseil with it. (}. Who made the contract on behalf of the Union Pacific Eailway Company?— A. I bought it, and Mr. Dillon afterwards took it for tin* Union Pacific. Q. Is there any corporate action relating to it appearing in the miimt* •'^ of the company? — A. I presume so. Q. It appears from the reports of the company that the securities ol that road consist of $1,800,000 first mortgage bonds, $2,81LM)00 consoli- dated first mortgage bonds, and 8n,1.4L>,800 of stock. Do you renuMnber tlie price at which the bonds were])assed over? — A. No; i thought that n)y i)urchase amounted to about $.'3,000,000. Q. Do you remember whether these figures of sto(;k and bonds con- form to the condition of t\v\\\^^ v.\^\^U\\\;\\Vvvi\v the sale was made to tli<' i- Union I^aciOc! — A. j^o, 1 UuwU V\\^^ \v3i\vi\>vi^\i v!\vAxv^'i^'^\\i^vt^ JAY GOULD. . Tou Ibiuk they have been iuercased? — A. Yes, Bir. . Do joQ reiiifDiber bow uucb the stock was when it was sold to Union Pacific t — A. I tbiiik the aggregate pnrcbaae was about I)«,<100; bat what we got lor that I cannot say without getting at ixwks. Can yon furnish that statement from your books f — A. I do not nr whotber that went through my books or not, but I will look and . But you cau I'urnisb the statement showing the amount of bonds stock obtained by yon under the construotion contract f — A. Yes, , And the amount purchased from Uovernor Evans F — A. Yes, sir; pOBSibly the whole transaction, )niinisaioner Anderson. Mr. Mink, you have not that hero! h i\ Mink, Ko, sir ; I have not. ^M THE UTAH ASD NOBTIIEBN. ^ , Did yon hare any interest in the bonds and stock of the Utah and tliernf — A. Yea, sir. , How did yon acquire that interest 1 — A. I bought it of Joo Iticbanl- in the llrst place. And then I went on and constructed the roatl. m I first bought it it was rather a poor thing, and Mr. Dillon rather ipoobed at it, anil would not take any interest in it bimaelf, but 1 ed it along and extended it, and finall.y it got to be a tine paying; lerty, and then Mr. Dillon came around and said I must turn it over le Union Pacific. I remindeil bim that 1 tried to have bim take it, be said I had a large interest in the Union Pacific, and I must tarn er at just what I paid ; and I did so. I turned over tbe stock and Muds at Just tlio cash cost of the property, Tbe cash cost of those bonds and the st^ock to you was the amount :h you haERtiON. TheUUhiuid Northern ltailnijiil(Jotii|iiiny. ft Witness. That 1 liav« fixj>lftiiic(l, MuniissiMiiir Andehsun. TU« MonUita Ituilwa.y Ouniiiiuiy. h*" Witness. IJitto. jpniit)isaioni>r ANDUUtioN. Mo inti'TCMt t 1' Witness. No imci-ont. miitsmiier Am>EKS(>N. The l^iwiviiuu and l-;iii|iorialtatIwa.v(.''Uin' _ u WlTNKSS. No interest. Uouiniiftsioncr .Vnubuson. The .Inuution City and Fort Konriuiy Kail, way Company. 'I'ht! Witness. No Interest. Ooiuiuiasionur Andkkson. Tiic Solomon Uailway Company. The WiTNEBH. No interest. Conimiiutiotier Anuebbdn. The }3alina and Hi>urhw<>Ht«ni Itttllvu; (/ompany. Th*" WiTNKsa. No interest. ('oaimiHttiouer Andebsiin. ThoKauNaitConti.d Railway Cutii|iatiyltia lii'<'n cxplaiiieil. Tliti (Joloriulo Central ItiLJIrood Couipauy, The WrTNKSS. No intjirest, except I liuuglit it niilltoii of tlifl botiitaor the i'i>iti|i:in.v iit ]i:tr, I tliink, anil aftvrwarda eonvurtvd thciu intii U p>-i' I'ctiL I'lilUiii'inl ti'imt l»)nih<. Q, rull;it>-nil irijsi IioiiiIm of what oo)n|iaiiy I — A. Thu Union Piicifid. tj. Whon did Unit octiii'! — A. That must Iuivb occurrt'd b^liue. I {javi; yon tliii amount of lionds. 1 had thomat thotimuof UtecoD«uii- datiou. Q. That trauSiUitiyn ajipuara in yonr Matomeut t— A. Vm, «r. Q. l)oi>a the atatenicut yun liavo fiiniiHlieU um kIhiw tbuniteatwlufb yoH Iwught tbosu Iwnde f — A. 1 think i took Uivm at imr, 8 per cent., and 1 converted them into It i)«r cent., and gavv the cuni)Hiny the tieiulit of the ditleroQoe. Oonimissioner Andeuson. ThtiUunYur, iSouth i'ark and PadttcBttll' nwid Citmpaiiy! Tho Witness. That 1 explained, h Conimissioner Anuebson. The Grwley, Salt Luke and PtusifloBiil ^^^^^^e Witness. No intereHt. ^^^^■•Dimittsioner Andebson. The Denvfr and lionlder Valley Itailroix' ^^^^ne WiTNFiHM. Nu iuluvw\. u\ \\vji,\. JAY GOULD. 589 lommissioner Anderson. The Oolden, Boulder aad Garfboa Eail- J CompaDy t . 'he WITNESS. No iuterest iu that. /ommisaioDer Andebson. The Georgetown, Breokenridge and Lead- e Railway Company f the Witness. No interest iu that. Commissioner Anderson. The Denver and Middle Park Bailroatl ODpanyf Dhe Witness. No interest in that yommissioner Anderson. The Manhattan and Bine Valley R«n lltpi* at tiiiiej*. lie was the tegitlrtr WHUiiWl orilji> r^impaiiy ut Omaha. Q. And Mr. UotineaT — A. I do not know wlii'ther Mr. Fluirncfi \m l>een there or not. Judge Usher nsed to Vie tliciv, y. Anyone else ! Mr. John F, Dillon. Mr. Jlolmus wont then? for Iho Kansas Pacific lie fought with the Qessiaus. A. I do not remember anybody lAna. (^ Who represented the Kansaa Pacitie iu Washington 1-~A. Jiidga Csber. I du not know that they had any uue in Waflhington. t^. iluw uftui have you bevu to Wauhingtun on thU buHiuesat— A. I went ilown to Washington during tbo pendency of the Thnrmno aiul tb« debates, and uftvr the bill wad paHHed 1 came bouici,ani1 1 bave nerer bcvn there since. Oh, yes, sir; 1 will take that baek. I »» down to testify beforfi the investigating conimitt«?eof the Kiil^litiof Labor, but I have not been there sinw. 1 got rather diflgiuiU^. LEGAL EXPENSES OF IITIION PACIPIC. Q. Do you know Low much the average annual charge was totbu Union Paciflc (Jompany for legal expeuRest — A. No, I ilo not. It iniiHt have l>eeH light, I think, compared with other corporations. Q. Do you know whether any money, ntock. security, bondx, or otktr inben'Ats have ever been used in connection with pending leglfOaliunM Waebiugton. or for the purpose of iiilluvnciug legislation, doriui; Um period that you bavu been connected with this roatlT— A. No, xlr. (j. Vou know of no much transaction f — A. No, air. tj. And you cau give us no information which wnnid enuble m Vi detect sneb transaction, if any such existed! — A, I do not think iky exist. Q, Do you remember Mr, Ordway, of Washington 1 — A, Yes, mt. AH TO EMPLOYMKKT OP MB. OBDWAY. Q. Do you remember writing a letter of advice that bo be emploj-eii in regard to some bnsineRS to procure advautjiges for the KaiisanPa- eillo similar to thoxo which have iKreu obtained, or were to be obtuiiKMl, for the Texas PacilioT — A. No; I dunut remember about it. ('omniissioucr ANDEltsoN. I read to you from the miuntea of IliR Kansas Piu;i0o boanl of Jitniiary 7, 1870, referring ti» oommantcaltoiiR i*ad by tlie president: " Also a letter dated December -G, lS7a,of Jaj' Gould, of New York, in regard to amendments to Texas Paciflc bill giving the Kansas PaciBc the same benefits for branch interHccting tlie 'i'exj»» Pacific, and recommending to employ Mr. Ordway to neconi)M tliis ol^jeel." Iie WlTNEHH. I have no recollection al>out it. lYoo do not remenilier that transaction at all T— A. No, I do not ■Do i'ou remember Mr. Ordway t — A. 1 remember Mr. Onlffay; ^Fbero did be reside T — A. Mr. Ordway resided in Ni^w Ilanp- JAY GOULD. 54] Q. Wft!* lio ill WasUinKton occa^iunnlly t — A. I tliitik bo was Sk>r- Wnt-at-Arma. WUetUer ur not liv was at that time I do not kuow. Q. Sisrgeant-at Arnisof tlie llouseof Kcprcseutativesl — A, Sergeaut- rArms of the House of Representatives. And I presume, if I wrot« ny letter, it occurred in this way: The then treasurer of the Union ftcific was from New Hampshire-— Senator Kolliua — and he was a great lend of Onlwiiy; and, if 1 wrote any letter, he probably came auut that; yes, sir. Q. What do yon remember about itt — A, I took the ground that the Dckholders of the Credit Mobdier ought to turn iu their stock to the mpauy, and I saw some of tbe stockholders, aud they said they paid do it if the others would, and I think that I pressed ou soniu iitfi there against those stockholders with the view of making them irn in their stock. They hiul brought', and were pressing, a claim for large amount against the Union Pactlic Company, I By Commissioner LlTTLEE: \q. Is that the stock of the Union Piicific which they receivedt — L. No; it wa.s in this way: The stockholders of the Credit Mobillw, nio built a jiart of this I'oatl, were saeing the Union I'aeiiio, alleging put there was a large balance due tbe Credit Mobilier, and of coarse be i>osaes»ioii of the Credit Mobilier stock by the Union I'aeiflo would fcrry tbe claim back into the Treasury. What I was trying to do was b force those stockholders to surrender their stock, and I succeeded 9 getting a great bulk of it turned over before they finally got a bdgmeut. By Commissioner ANUEltsoN; Q. I will read an extract from your letter, dated July ly, 1876, and ildressed to the president aud directors of the Union Paeitic Itaifrowl ompany : KKTLEMBK: Oil l»>liitlf uf tnvncir and other BtockliDlikosed by some of te directors of the company t — A. 1 think that they thought it was a letty bard pill, for they had had a pretty hard time in the early history 'the company, but I think the leading ones came in. Of Uy question is, whether you remember who opposed this proposed ^fi^tfk joar partt — A. No; I do not. \ V. 8. PACIFIC RAILWAY COMMISSION, ^^^^^| CutuinisHioMor Anderson. I will reuil to you from tin- miii(iM«,bi I'oJ'reBli yonr recollection, the fact that it appears thai — • On motion of Mr. Duster, Rnohcd, That the cmumittfi) docliuu to bring snlls, nn rctjnralitl \yy Mr. 0"nld. Tic Witness. Yea, sir. Q. Do you remember that Mr. Jiexter opiH)m.'(l that ac^tion I — A. ] do not reiucmber it, except as I hear it rend there. My iuiprestiion u Ott they ilecliued to bring the suits, ami I brought thetu iuiiividiially, Q. I now read to you another letter written by yon on the 30lb ef July, also addressed to the otHcvrsof the Union Pacifio Usilroad (W pauy, iu which you state : On bobatf of mysnlf and ancli I>^b(^r atixikhoUliini n« nlinll thonito l.o join,! h^n'tiy ri'iiunat foil to iu8lHllt« the TuquUUe Icgul proReoclJD/icH itgailmt the tniiitnM iifllii Ookoa A^es and Davis ooutrootsfor ooiiHtmoliniiuf tliu Union rftrifii: niiut.aiidite ugaitiat till) ImlWidual stocklioldera thermf, for it full Actsaautinic of a11 {irdUfonii'c by them, or any of thorn, under c(^^tllin uUvgud noutructtt, uud for tlin rntaru ibcmil tu tho trcsanror of this company. Do yon remember renewing that auggcation of yours Hbortly hCUt the Arat reaultf — A. That ia a different act of cuutrautt allu{;ctbi*r. The (Jredit Mobilier cou tract extended a certain distuntw we«t of (Jinalia; then the contract referred to tliere came in, and went atiU further m\ so that these are two separate letters and i-efer to two separate selJi or eon tracts. Q. Bo you remember the fatt that as to bolh of thetMt trauHiiislioMii eoumittco was appointed to negotiate and settle l^A. I would have to ret^esh my memory from the record. Commissioner Andebsok. Iu regard t^i the lirst letter, it ji{)paus from the mmutes that — Ou moticQ of Mr. DoxttT, Ilnolved, That Messrs. Jay Gould, SitmiiQi M. Mill^andOourge S. Scott, ilinietatti'r tliia company, be, aud thoy hereby are, appointed a i'nmmitt«e to iiogatiat« aai wni' (ilotn a filial aettlcment uf uU claiiUH bctn-v«n this company and the Creilit Mohilierol Ammiutt, for tU(i rcNpoctive Btockholdcrsof Haidcorpomticma, nnd, if mioL settkimni rthall hn made, to oxncuto tinal releases to he interclirinitPd between the (lurtlcfi, inil to do all other aots that are neeesaary to give oompletw ollccl toanoh tinal wltlooiMi', anil that the secretary of this eonipany ho empowered to Bet the seal of thctiiin. pany, &c. I have given you the body of the resolution. The Witness. Yea, sir ; I remember that now. am' eumplute a Saal settlement of all claims bedrcen this company and the Uvxlf under the Ames and Davis contracts, and.if siioh settlemeDt shall be made, to tie- cute final release to be interchanged between the parties. And to do ail other aets that might be necessary. Did you sorveon those committees f — A, I think that wo made settlements nnder tbm I that is my impression; wo took assignments from them, Q. It appears from the minntes of SepH'mber 22, 18T5; xiin upptOTPd. A 14.000,000 KOTH. What was that agreement. \ — K. l>iNj.\EiV.ytt»&,9,\i«&Ki^&Qai menioij", tras an agreement bj \jh\c\i,fiiat,ttiete'w^a*<«'rtak\\\.».-«vis«fiS.*'«3i8v ; tlKij ^^ Wil- r wiis JAY GOULD. I«dwraeending litigations tbat I J been obliged to look into. As J understand it, and 1 tbink there ) doubt about it, the Credit Mobilier had a construction contract I the Union I'aciflo Gailroad Company to constrHct its road from tha, I think, to tbe lOOth meridian, a distance of 247 miles, Mr, Mink t. This contract is in yonr records. Tbat i« old straw threshed ■. When that was closed up » note was executed for |4,00(>,OIH>, av di-cumstances tbat have led to a great deul of litigation, by the an Pacific Uailroa*! Company to iho Ci-edlt Mobilier Company. Credit Mobilier Company claimed, in addition to these 4i4,UIH),tHH> lotes, a balance due for construction of, 1 tbink, $1,(KI(),(KH) or 00,000 more — not to be precise as to figures. Thi^ Credit Mobilier ipany instituted a suit at law on this pitimisaory note and aecouut^ le State of MassaehusettH to i-ecovcr the aciouut. j| immissioner Andbrson. Against tbe Union Pacific Itailroad f ^M r. John F. Dillon. Agniust the Union Pacific Itailroafi CompainH uuting with interest to *7,000,000 or *8,000,000, pmbably. Mf™ tlett, the couusel to tbe cumpauy there, filed a bill in eijuity setting be eontnict, and that it was at least fraudulent in law, twcanse the B eet of men represented iHttli parties. That litigation ran aloug 1 three or four years. ^m immissioner Andhuson. Three or four years of wh;il I ^^ SUIT AGAINST HAZABD. ^ r. John ¥. Dillon. Three or fonryears ago. Meanwhile, as 1 uii- itand it, on Mr. Gould's accession to power in the Union Pacific ipany, and this state of things existing, he introduced these resolu- a here to lay the fouudation for a 6tockbolder.s' suit against Ibe lit Mobilier Company on behalf of the Union Pactlic Company ; I know that he did bring a suit in Ubodclsland against Uiiitanl laC charaet«r. Perhaps be might have brought others. Kow, yuu find, when you go to Boston, a paper whereby tbe largest Credit lilier shareholders transferred tbeir Credit Mobilier shares to the HI Pacific Company in consideration of a relejise from ail liabilities ■e Union Pacific Company, and, as tbat paper is in writing, I "■ M cii'k: nAn,wAY commission. Bivii ji'ii iiHTtily Iriim niy memory tlio suhstanc© of it. Th«t leftUie mill Milll (..iiHlliiB. ltiiliii»>' contract. In tbat cotiili. Ilii'ii "I ililiii."« joii will Ilmi Mmicwlipre on these rccortlM it rcsolation, SVIii'ii III" I iilon rit('ii>>' ^ol into tlie control, tbrougti Mr. UoaUI'g ttlTiii'lUi ""» 1 "ilif >'• "f "■' niajoiity of llie Credit Mobilior Htock, Ihcj- ■ii'iijiiiaoil to liiseontiiim' the (luU in bostAii on Ili« notes inut account; iiiul >"» will 1"'l poniewlifn' iiii lliose rwonls a resuliitlui), 1 ibink in- titiiliUM'tt Iw Mr. Gould, natborizini; nnd directing (lie diKcontinuniice or llmt null. \nn.-reniwn Oliver .\i»ei>, tlie wune gcutleniaa who liw liml Ihvii inoniioDt^ ha* u^dsy, and wlio w.i« a larf;c shareholder of |lii> rtvdil MoliiVifT. was appcKoteil, at the instance of Unzanl, in tbe ttiitlM Staiift* rirroii mnn hw tit*" distT(<;t of Peiiunjlvaniu, as reecher uf 111" i'rr^lii M.'ltilipr. Hi* atromeys went to Boston and jjot an in- iHttotwn ir>jii«i tW »rtJ(» of tbe Credit Sloliilier CH)mpanv to ciijjcou- Unw tlr *uii au thr KjBt>it,0()0 note, and tied up th« matter iit lh« vtn;. l"h«- *un ic nffctr in lutve tlie note canceled, and to bavu rh (Kw»int -^f jW ihe^ ?f*<* "0 il'e Credit Mnhiller contract, progrttwed (If s.U>« lencU. »!«»;- ^ri was finally iirtrucd before the HOpreme oonrt __«r M»!«anivviT«. nAt Mian viii» ef|iially divided. At all eventt^ Tbattook ayearorlwo; and when iiwai : ar% *ao6^ that the eompnnj's bill in eqnity must fail. Ikmt, lu the I.'J.'itli Massachusetts. The bill lo ti. Mhk-h Wl\ (lie Credit Mobtlier Hoit for tlili nilnst tbe coiiiiDiny; and the coin|iuDy,ta liabilit.v. a[>[iivreiitly dffensolcss— that ji i • eompauy— hud U) iMiy the ontstanding Oiwlit m Sgare. So that 1 think they own vvery hIsiir, Kciii now. This wan done as a means of escariag f «■ tbe note and on the balance of acconnt oJaiual r Company, r AJ»gB8os. You know, of coun«e, that sbortty attii 1 committee a bill In equity was flUdbytlie >.\. 1 know all about thai. - \. .\(n)iiist the Union I'acitie, and a uumlici ■ 11 interested in the Oakes Ame», Dftiiii, . '! liiai theiv was a vurj" large aHienutnt ■.ii-s, which onjiht, in eqnity, to be rejMiil ':i Padflo Railway Comtmny. -. ^ir. That Is a correct description of (he Will ' i.t the siibstaneo of it; yea, sir. ^^'hen was that hilt brought ; what ysuf i bill was brooght in eonaeijueiiee of tli» I- iTunght in the fall of that year or tboMI a decision was rvAohnl in the JiSIb United Stjdu- ' pr\>lwbly in 1877 or I«7a Tbfn the attioo that w« bavu just quoUd by Mr. (Joald, by which eertaiu releasw mo «Uln that anit vraa pending and before itwaadt' i«It. I tk< not know of any releaae, except in wa- -pUMW o( ituA vxjxk. lo the Uokiu Poclflc Com- tft VTiU»f , »A ycm «% Va.'««\S.t iLLON- Iio,eir; Idouot. I cannot recall precisely DB of this afireement, whereby the Credit Mobilier shareliolders ted their Bhurea to the Union Pacific, but I think that iu cousidei I of that they were released. That is my recollection of it. h. Holmes. The Union Pacific fell heir to their rights. tr. John F, Dillok. They got their shares. lom miss inner ANDBfiaoM. I want to diaw the distinction between Ir right in the uot^s and claims which would pass by the assignment [beir stock, itnd their liability, if^ny there was, to the Uuion Pacific the very large claim alleged to arise out of fraudulent dealings in rectiou with the contracts. My question is whether the laiter claim released by the action of the Union Pacific Company while the suit h tbo United tStatea wns pending and undecided. ^r. John F. Dillon. My impression would be, without the dal Die me, that these shares were assigned pending that suit, pp. IIqlmb;^;. Pending the appeal, |r, John F, Dillon. Or i>ending the apiwal from it, tommisBioner Andkbson. The release given to these gentlcmi tever they were, would no^ necessarily appear on the files of tl b"iy- It. Jobh K, Dillon, >'o; that may have been given in separate re- Bes; but 1 think you wdl find, when yuu look at that paper, that it ites that whereas release of the Union Pacific makes certain claims lanst the Credit Mobilier, which they disputed, and whereas they have ttpotnised them, now they hereby assign their shares to the Union JDlflc Company, in consideration of which the Union Pacific Company fmea them from UabUity. And If the Massachusetts decision is right, \t there is no liiibility, it was a clear gain of so much to the Union ti&o Company. [lonimisfiioner Andebson. I am not inquiring about the Massaohu to decision. Will you give me the name of one of the prominent per- i named in the Connecticut bill 1 Was Mr. Uushnell one of them' "r. JohnF. Dillo.n. Yes, sir; and Mr. Frederick L, Ames, Oi' j, Oliver Ames, and Dumot. I oeu ent iific i in nim luit I J. 8. PACIFIC RAILWAY COMMISSION. ^^^^j^J Commissioner Andeeson. My qneBtion is wlietber you know, Bitiw ofyonrowii knowledge or by iDf'ormatioii tlerived from your busintu with this conipaLy, whether Mr. Thomas C. Daraiit has received nt my time from the Union l'iw:ific Itailroad CompHoy an iUHtrument wtiiRb would be a bar to a miit, if now instituted by the Union Pacific Bttilroad (Jomimuy a^^aiuet him, for the same cause of action contained to Hk creditors' bill filed by tbe United States in tbe cii-cnit court vf Cm- iiocticut f Mr. John F. Dillon. There have been seventl resolutions of tliui^W' {lauy on this subject. I cannot undertake to re^:all them. They nrv ail of record. 1 cannot sttite now that any sncb reteaiws have beeu niwlv. Certainty, since 1 have had anything to do with the company, uvcir- thing on that subject is on its records. By Oommissioner Andbbson: Q. Mr. Oould, I will tuik you the question, has any each releawf heeii given lo Mr. Thom.is (J. Diinvnt! — A. 1 do not know. Q. Or to Mr. Oukes Amesf — A. I do not remember now to wbouiw gave releases, but the records will have them. Whatever I iliil, Ire- ported. Commissioner Andebson. Your report is simply as follows: Mr. Qonlil, from f1io Hpecial comniitt^p, niipointcii July 21, snbiiiittpil u lota il iigreemeiit wilb tbe Creilit Mobilier of Auiu licit, whioh ttut approved. And therefore the records do not disclose whether the reles«(» *ert given or not 1 Tbe Witness. That was tbe agreottieiit which the parties sipped, riuI that was their release. That agreement waa the rek^atie. The conijian) signed it, and then these different parties, as they surrendered up [heir stock, signed it. Commissioner Littler. Is tliat agreement ou file at Boston I Mr, John F. 1>illon. Oh, yes, sir. Commissioner Anderson, Tbe only thing is we cannot tell wliether there was any other release or not. The Witness. I do not think any other paper was given. Commissioner Anderson. When will it be coTivenient for you M hand those papers to ns that were called for to-day ! Tbe Witness. 1 will let Mr. Mink get them, with my book-keqwf- He has access to the books. Mr. John F. Dillon, 1 have a few questions to ask him. Commissioner Littler. Ue had better come back to-morrow. ^^^ may want to question him further. Tbe Witness. I would like to finish np, if 1 could. Commissioner Anderson. There have been some minutes hautleil at' here, and I ought to read them before wc close your examination. The Chairiuan. The Commission will adjourn until to-morrow ntH o'clock, (lieu, 31r. Gould, and you will be ou hand at that time. The Witness. Yes, sir. The .Commission then adjourned to Thursday, May 19, 1887, at " o'clock. k JAY GOULD. 547 No. 10 Wall Street, New York, Thursday^ May 19, 1887. The Commission mot pnrsaant to adjournment, all the Commissioners >eing present. JAY GOULD, being farther examined, testified as follows: the consolidated mobtoage. By Commissioner Anderson : Question. After this consolidated mortgage was made, yon became its ;nistee. Did you make yourself familiar with its contents! — ^Answer, ifes, sir. Q. I am going to read to you the 22d article of the mortgage : Article 22. Said trustees shall in no case whatever deliver to said company, or »ermit to pass into its possession or nuder its control, the bonds secured hereby. Said K>nd8, after their execution by said company, shall be delivered to and held by said mstees, and said trustees shall not certify said bonds, except as they may be required o be issued under the provisions and restrictions of this and the three following; jrticles, and for the purposes therein mentioned. And it is hereby expressly agreed and ieclared by said trustees that they hold said bonds upon the express trust^ for the due »erformauce of which each and every one of said trustees is individually responsible— .aything herein elsewhere contained notwithstanding — ^that neither they, nor any ne of them will certify the same, and deliver the same to said company, except it be ither firstly, as to the twenty-four mUlions in amount of said bonds, in exchange )r bonds, coupons, interest warrants, and funded interest certificates securecf by the lortgages hereinbefore recited, having priority over the lien of this indenture, in ursuance and performance of the contract for conversion between said company and ud Dillon, Sage, and Villard, hereinbefore recited. That refers to the contract for the pool securities which are stated as be foot of the page 156. Do yon recognize the contract that is referred 3 there f — A. Yes, sir. Commissioner Andehson (continuing reading) : And as to other bonds not comprised in said contract at a rate of exchange not cceeding that in the next article hereinafter specified. Do you remember that article and that limitation f The Witness. Yes, sir. Commissioner Anderson (continuing reading) : And, secondly, as to $6,000,000 in amount of said bonds, and as to any surplus that lay remain out of said $24,000,000 after the conversion of all the bonds, coupons, iterest warrants, and funded interest certificates lastly referred to in exchange for tie first mortgage bonds of other companies of the character and amount in the next rticle but one hereinafter specified, or for the purpose of providing funds for the ODstr notion of extensions and branches of said Kansas Pacific Railway, at the rate nd in the manner and under the restrictions in the next article but two hereinafter pecified. And in no case shall said trustees issue with said bonds hereby secured my overdue interest warrant thereon, but shall out ofi^, cancel, and deliver to said sompany on each 1st of Mav and 1st of November all interest warrants attached to ^6 aniasued bonds then held by them. Do you recognize the article vrhich I have just read to you f The Witness. Yes, sir. Q. Have the directions of that article been complied with by the Irosteesf — A, Yes, sir. BONDS ISSUED UNDER IT. Q. Do you mean to say that no bonds have been issued except those )rovided for by the $3,400,000 contract in exchange for the lK>nd8 le- brxed to in Article 2*6, at rates other than tho&e %^^c^\&!i^ m h:c!^^^*&\ &4S U. S. PACIFIC BAn.WAY COIOOSSIOV. — A. Tbut i« iiiy uiiilcrBtutKliiig. Tou (trobabljr got that tnixii thin way : Tbc- (Juiun raciflu aftt-TwardR, in various raw*, bad U^ iDora for llioiiti uuderlyiut; oot«taii(liug bouds. Ttit^re were ceitlll _, HidorH that lay back aiid would not come in, niut tlit) Ciilon Ptciiil would buy up tlioBe boiidH from time, to time ami r>'itif to tliv tnislento exchauiju ttiem under tlie laurtgage. W« tu-tllvd nitti the Uniou PaciSt ill tUiawiiy: Firot, w« gave tbi^tn credit fur xIki nrnoiint lUat ibt^yvcq ontilliid to under tbo mortgage ou the surrender of ibL-.H4> Iwndsln tbg new bonds, Tbou, if tbere was any leeway due to Ibo. I'niou i'acifiois bonds, wbieb tbere always was, tbey made the selUeuient ami paidlbt dillereuce. So tbat in tbat way you probably got it mixed up. g. Wo will Bee bow far tbat explanatiou will carry U8 tbroiigli nb^n wo compari; tbe eutries tbiit are contained in tliti account of ihe uae of your boudii. i bav« before mo a statciucut, banded me by Mr. Mtuk, of tbeeousolidated mortgage bond ac<»>unt,coiDuit^ncing January, 1S8U. Tbe entry was made iu January. Wlietlier tlie bonoR were aetntUf isuuiHt in January, 1880, does not appear, Tbe il^ui tu wblcb I callywr attention m tbe third item, and ia as follows : Pnr invcmit- bond* tokcii in i^xchangB. utompi-a, «j,907,4r« tot (2,1)7(1.4:11,41. V> •touiMd, flUT.IUW lur |118,31(.6U. Tbo two lut figunM lunke tlie toUl of Uwcoiuid- iilktwl buiula ftt,l»<,T4«I.S;. From tbU it woulil appiHU- Uiut for t2,lM)7.4f>g incuiw biuuU t%07U, 431.11 m cuusulitUud boiidHWiTD tBUtol, iMiiiig ol lli>' ri>Ui«r7t1««iiU. Can you ejcplain tbat item T — A. So, 1 cannot, Tbat is ffir tlic L'mn PiMifle. Ijet itieiu explain Ibeiruwu. I can only »)H>ak fur tbe triuitMt, I did not keep tlieir buoks. OomniMaiouer A^dkkson. Tbe trui^tees itwned tbat amount of bonds. Tbe \ViTXK:nd a^tconut Q. It i« tbe issae «f tkecMtaolidaced botMb ander tbe Kansas PaciBe uuvtjrv^v Mr. Miak trite me the Srat entry u taken from ibe Kiuaat l^M?lh* UxAkSk Ale tkaae aot the iftaTtif boods tbat wt-rv luJd unda lb« pool MftwaMHtt for vUcfcaa|wettlciH>i«e(«aatBadeT— A. llhiuk .\wtt«v««; f yWMIfci>i«»fKtfceUMlni*aceountfof hwUiffi or MBiaB I kMv maOmt afcoot ibis aecMHt. I ifeM a* aeeeoBU or tbe tni i^ Tuilli iiiiiarii rn iiiiliiii' 1 Mr. (.-^tef.Itlibik, ktiHW tbal 1 WW— I, 9. WbwwiwIfceiifiMtt-^A- im^itmhegtmy^Taik. ^_ «^ tV««»«iate>»i»^bwktolfc.CkhC Ctallr.(Mflrb««i< Tr -rr'^ l ;; — 'i ifcini i iiliaiiiiiiaa ftlfi ■wbmih* fl f "-li*- IT U '--7T irriM^i III.I i>iiMiHi_Ti i ■ i Hi H ii - "Ti llTT"' «aM»iiHBt» •UcfelcaHjutf JAY GODLD. fjllr. Mink hIiows Coiiiiiii^siuiier Amlersou Article 23.) Commisaioiiur Anderson. It is probably in Article 23, as to $2,000,- W. Mr. Holmes. Page 170, the first paragraph on the page : Ami npon fnrtbor truat aa to two millions thereof, to omjiloy the same to disohargn '^ llnnidate lu caHli tbo arrears of ioloreHtdue on unpiiid uud nnfiiDdod uoupuus aud led inUireat Rertitic^ute ronpouB, iind Interest warranto, a« hereiubeforo recited, _ for aaoU purpose aaid truBteo» may, and are hereby antboriKOtl, with the coDueut ! MUd compuny, to oell and diitpuHe of auf h two millioDH in amonnt of naiit oomoU- ktod first-iuortgnse bnii Q. Who are Maxwell & Graves t — A. They are a firm of brokers. Q. They were largely interested in getting up some of these bonds, 1 1 Judge from this account T — A, .1 do not know. Q. Did they not frequently apply to tlie trustees for the issue of mils in exchange for bonds surrendered by them ! — A. I do not know. do not remember. BONDS ISSUED 10 MAXWELL & GRAVES. Q. The next entry I call your attention to is on the seeond page, for 8 bonds, numbers 8551 to 8653, issued to Maxwell & Graves, for '6,000, first land-grant bonds. Why were «103,000 issued for 475,000 1 •A. I suppose tbat was a settlement with the Hniou Pacific. The DSteea in their account would only charge them at the price mentioned the mortgage. The difference there wonid be charged to the Union ^ lific in account of bonds which they were entitled to draw ; a balance u always due theni. THE UNION PACIFIC ENTITLED TO DRAW BONDS. Q. Under what provision of this mortgage was the Fnion Pacific ulway Company entitled to draw any bonds from tbem T — A. When 1^ bought these underlying securities, sometimes tbey turned them 1 for awhile without dr.iwing the bonds ; this sum would go to their edit Then they had another credit; if thej did not draw the modey the interest, that would go to their credit. The vutwftst o\i AJaiMefc, 550 U. 8. PACIFIC RAILWAY COMMISSION. bonds was payable as out of the proceeds of the land grant, but if the company paid that interest out of their own funds, out of their own treasury, thev would strictlv» with the trustees, get a credit for that amount. I think there is some $3,000,000 or $4,000,000 to their credit now. Q. The entry that I call your attention to is not an entry for bonds issued to the Union Pacific, but an entry for bonds issued to Maxwell & Graves. Do you mean to say that that entry is incorrect! — A. Mr» Dillon probably made that negotiation himself, and probably turned th^ account in. That seems to be a negotiation made by the Union Pacific ^ That account is from their books. They probably made that contrac"^. with Maxwell & Graves. That is not the account of the trasteei^^ Their account will show entirely differently. Commissioner Anderson. We wiJl certainly have to have Mr. Cal^f here in order to get any explanation about this. The Witness. I prefer to let those accountants explain their ow^u books, because I have never seen them before. Q. There is no doubt that the bonds, as stated in this account', are issued and outstandingf — A. I do not kng w about that. I can only say to you that you will find that the accounts of the trustees will balauce with the mortgage. Q. I presume so ; but the question is, the rates at which they parted with their bonds, and what securities were delivered to them when they issued their bonds. There are, then, a number of other entries, amonnt* ing to $400,000 or $500,000 of bonds in all, wholly issued to Maxwell & Graves, and all for first land-grant bonds, and in every case the namber of bonds issued exceeds the number of first land-grant bonds surren- dered. Is your explanation the same as to that? — A. Yes, sir; I think Maxwell & Graves were the brokers of a gentleman who lived in Saint Louis, and who had refused to convert his bonds at the rates raentioued in the mortgage, and whether he had commenced litigation or not I do uot know, but Mr. Dillon undoubtedly made an agreement with bim, and Maxwell & Graves acted as his brokers, and they bought these bonds. But afterwards, when they came to settle with the trustees, vo settled with the Union Pacific in accordance with the mortgage, no matter what they had paid Maxwell & Graves for them. rURCHASE OF BONDS BY UNION PACIFIC. Q. Then your statement substantially is that the Union Paeificbnuj^'lit these bonds of you, paying for them either in surrendered securities or in cash, or in a charge in their accounts against them, and then deliv- ered the bonds after they acquired title to them! — A. Yes, sir; tbose were a i)rior lien, but undoubtedly the Union Pacitic bought themii' for the best bargain they could make and saved the ditterence. Q. I then call your attention to this entry: For I'M) bonds, Nos.04.')S to 1)587, delivered to Oliver Ames February IS, for 755 shares of Ceiitnii Ih-anch stock. What was that transaction? — A. I i)resume that w:i> the payment of the Central Branch stock. Q. To :\Ir. Ames? — A. They did not i)ay it to Mr. Ames. Q. Under what provision in that mortgage were you authorized to issue bonds in payment for Central Branch stock ? — A. Those were bonds that belonged to the Union Pacifier. Q. Acquired in the same wav as vou have stated before?— A. Ves. N/r; when you come to see the accounts of the trustees yon will seetuat their accounts are kept aecowWvi^ to Wvo, \\\Q^\\.^J;^^^•^ \iwt the Union Pa- U. 8. PACIFIC RAILWAY COMMISSION. ^^^^^H (4,250 incouiit Uoiids, iinHiibunliiiateil. Do you rMvlluct that traiisiio tioii t — A. No, sir. OominissioDer Ahdbbson. You and Mr. Sage a|t|H:ar to bavu becu truBttfOB to tbese boadn. Mr. Holmes. They were truBt^ea of tUe eonnolidateU mortifage. (JomniiBBioiiiT Amdkrson. '* UelivtJi'ed to Guuld aud Sage, truatees.^ Tliey would not deliver to themselves. Do you know the meaiiiug of the answer t The WiTNBSS. They delivered to us tUeBe iitidflrlying bondti. Mr, Holmes. They delivered to Musurs. Gould and Sage, iw tnuttM of the consolidated mortgage, the iHtndH eignifled there anceived, for instance, $3,070,431.41 lor *2,907,4.!i4in- ne bonds unstamped, from the Union Pacific Company, us you ex- ined, that appears on the face to be 7U per cent, of the face value, that correct ! — A. 1 do uot propose, as I said a little while ago, to tier the Union Pitcific accounts. Let them explain their own. 1 will tlaiii and father my own. 1 can say to you now that I did not dei >ae of those underlying securities myseltl i put my own in at t ma mentioned there, and I never aftrerwards dealt in one of them, i de a dollar of profit. ). Will yonr account show the nnml)ers borne by the bonds whis I Burrenderedf — A. My account will show every transaction I 1 I I will give it to you with pleasure. ). Tbe qnestiou is, whether it will show the uombers borne by t tdB which yon surrendered. }omq)i(isiouer Littler. The serial numbers. L I do not know whether Mr. Morosini kept the numbera of I tds. I presume he did, though. Ho is pretty careful. i 651 U. 8. PACIFIC RAILWAY COMMISSION. ^^ Q. By tbo teims of tliia mortgage you are required to keep tbi-j* siir reutiered bouda iu your posse^sioD uucauceled f — A. Yea, sir; we wcjt required to keep tliem siiiTcudered and uDcaDcelotl uutil we got in Itii' eiilire issne of tlies© bouda. TIibii we canceled tbem. Q. As to quite a uumber of tbene bonds referred to, yon liavo not yi't got at the eutire issue 1 — A. No, air; tbere are aome few out. Q. There ^e a large number of tliem out! — A. No; I think tlipj-are pretty well in now, Q. Are there not quite a number of the Denver extension still oiill— A. The Denver extension are nearly all out, except aa the sinkinj,' fund retires them. There are none in the possession of Gould and Sage. Mr. HoLMBS. Yes, sir; you did. You reiwved quite a immlMT of them. Oommissiouer Andbbsok. Yea, there are quite a number meotioued in this paper. So there are quite a number of other seeiiritieis mo- tioned here which have not beeu completely retired! The WITNK83. Yea, sir.- Q. Where do you keep these surrendered bonds 1 — A. Thoy arekopt in the Mercantile Safe Deposit. Q. In New York! — A. Yes, sir. Q. All that the trustees have received I — A. I think so. Q. Can those that came ft-om yonrsclf be identified by numbenil- A, Yes, sir. Mr. Holmes. Commissioner Anderson, I can tell you bow tlioso uv counts stand now. They are made up fVotn the books of the Hum Pacific, in view of that account. Commissioner Andeeson. My inquiry is mostly directed to tliw H]iecitic items and I cannot inquire intelligently without Mr. V-AkVi' biioks, Mr. Holmes, That is very true. Commissioner ANDEESON. The mere present balances of the atconnts vrnnid not give any liRht. Mr. Holmes. Not aa to these details. BEQUEST FOB MB. CALBP. I Commiasioner Anderson. Can you send for Mr. Calef? Mr, Holmes. I do not know anything about Mr. Calef's movenieu!'!. The Chaibman (to the sergeantat-arms). Go for Mr. Calef, aniliwk him to step around here. Q. la this account in a large book or is it just a ledger t — A. I tliint it is large ; yes, sir. [To the sergeant-at-anns.] Say to Mr. Calef thai Mr, Gould wants him to come down here and bring such accounttiortlie iHMjka of the trustees a« will show how these bonds nere insued. Commiaaioner Littleb. You had better write a letter to him, (Mr, Gould then wrote a letter toMr. Calef, with iustruoions tocoiiw to tbe rooms of the Commission and bring such books or accounts of lli* truateea aa would show the issue to Mr. Gould and Mr. Sageorilie consolidated bonds, in accordance with the terms of tbe mortgage] The Witness. I think he has the book showing the iaane of tbf«e bonds, because we very frequently had to call for the account to ew whether the Union Pacific was overrunning the mortgage or not. Oommisaiouer Anderson. Mr. Calef was examined as to the isstt of these bonds, and so was Mr. Ham, if I remember right. JAV GOULD. INDEBTEDNEKS OF UNION PAPIFICI, DBCEMBF.lt 14, 1K79. 1 By Commissiotier Litx'lek ; I will ask yoH some general queatioii for tbo puipose ot'coiiceo- .ng these figures in a shorter s{>ace, if possible. Will you be kind igh to tell us.if youknow,theamouutaof Iiidebteduefisof the Pnion lie Uailroad Company existing on the 14tb day of Devember, 18701 ;ribe the several indebtednesses which existed against that comiianyj ear as you caii. le "WiTSESS. You mean the consolidated company t tmmissioner Littleb. No, sir; I mean the Union Pacific Bailwi pany. I mean before the consolidation. , I had a statement here which I shoald like to refer to. I had tj itaeot made out. >miiiis8ioner Littleb. I know you had, but I want to group ■es together. te Witness. The total indebtedness of the Union Pacifie wi 172,391.10. tmmissioner Littleb. Name the several securities which matle iodebtedneso. ITNESS. Those were the various issues of bondu. Will you please name them I — A. There was the first mortgage, r. Holmes. The Governruent lien f le Witness. The Government lien. There were the sinkiog-funi la, the land-grant bonds, the collateral-trust bonds, the Omi ' gej amounting altogether to $88,472,301.10. . How much was the totel oatstanding issue of the stoek of pauy at that time ! — A, The stock was $30,762,300. . That is, in addition to the $88,000,000 you have spoken oft — j t was in addition to the $88,000,000; yes, sir. INDEBTEDNESS OF KANSAS PACIFIC. , Will yoQ please give us the amount of indebtedness of the ICansar ' iflo Kailroad Company at that time, and inchide in your answer all e branches which made up the eight hundred and some odd miles. It which you have testified t — A. The indebtedness of the Kan8a.s iflo was $35,102,518.50. . Enumerate the securities which cover that indebtetlness, please.^ That would be represented by the first-mortgage bonds on the a )D8 east of the 3d4th mile, the Government lien on that road; tl _ venworlh branches, the two issues of land-grant bonds, the D(!nver osion bonds, the iucome bonds, the funding bonds, ami the over- interest. . Have yon enumerated the stock of that road t — A. Ko, sir. The. k of the Kansas Pacific was $0,809,350. . What was the stock of the Benver Pacific road t — A. The s 16 Denver Pacific was $t,000,000. . Those were the outstanding secarities against that company ll date 1 mentioned 1 — A. Yes, sir. . I will a»k you again to give the amount of your holdings ii IBo aeourity at that time T— A. 1 had $27,000 shares of tl $1,000,000 of the bonds. i V. S. PACIFIC HAILWAT COMMISSION. ^^^^^H Q. Wimt issue of bonds ! — A. Of Ibe collateral bonds. Q. Tbe collfttoriil trust bonds t — A. The collateral trust; yea, si^ Q.' Yon had a uontrolliug interest in the Union I'acilic, had yoa Dot, at that timet — A, No, sir. Commissioner Andkbs^n. There were 360,000 shares. Q, What wostbetotalumount of jour holdings iu the Kansas Pwific aeouritiea at that time f — A. I had $4,000,000 of the stoclt, par value, Q. That would be 80,000 shares f — A. Eighty thousand shares. Q. Ualfsharesl — A. That is very nearly the figure, I liad tbeexact figures here. Oommissioner Littlek. That is near ouoagh. Tile Witness. I forget how many of t4ie bonds. 1 think aboot ^3,000,000 of the bonds. OWNED MISSOURI PAOIPIO ABSOLUTELY. Q. Did yon own tlie Missouri Pacific Railway at this time t — A tu, m: Q. You owned it absolutely f — A. Yes, sir. y.' Were yon a director in eiicU of these three coiii]taniaH at tint time 1 — A. No, sir ; I reaigned on the 10th of January from tbe KantH I'aciflu Aud tbe Union Pacific. Q. How long had you been in the directory of those corporatraw prior to the date of your resignation 1 — A. I had Iteeu a director of tbf Union Pacific since 1874 ; and in tbe Kansas Pacific, I think, from itlwut 1877 or 1S7S. The records will show that. Q. As I understand you, immediately after this consolidation, wliicli took place on the 24th of January, IMSO, you were again elect«d ad)- rectoi' of the new consolidated company 1 — A. Yes, sir. DENVEa PACIFIC. Q. I have not got it qnite clear in my mind just what took place in relation to this $4,000,000 of Denver Pacific stock. Do I undentwl YOU to say that vou bought $1,000,000 of Arapahoe Coantj S» $100,0001— A. Yes, sir. Q. Did you turn that *1,000,000 of stock into the Union Pacific Kali- way Company — the new company t — A. No, sir. Q. Waa it the old company I — A. No, sir. Q. What did you do with it T — A. I turned it into the Kansas Puciti' Company. Q. Did I understand you to say that at that time the Kansas Fiii^ifi'' liailway Company owned thebaliiuceof that issue, about $3,000,IM>I) !— A. Yes, sir. Q. Was that $3,000,000 released iVom the trust by virtue of Uiedf cree of tbe court here f — A. Yes, Bir. Q. I understand that the trust received a credit in this way: Tbi" you made your consolidated mortgage for $600,000 less than yon otiier- wise wodUI have maaiue8, this among them. So that in that way they became the possessor of llie entire $1,000,000. Q. Did the consolidated Union Pacific Hallway Company issue a like auiuber of shares of its stock for the balance of this $4,000,000, after it Itecaaie an asset of the company I — A. I presume they did ; yes, air. Q. That being true, to whom did that stock belotigf — A. It belonged |a thu consolidated company. Q. To the Union Pacific Railroad Company*— A. To the Union Pacific Kailroad Company, Q. What did the Union Pacific Itailway Company do with that lt<>nkf- A. They used a portion of it to pay me. (^. Please state what portion of it they used to pay you, — A. I bad tliu account h(. I think they also g:ot some stock of the Khrbos Pacific Thei-o was not quite $10,000,000 issued, if I remember. CcHiimissiouer Littler. Mr. Auderson calls my attention to the exact itnount furnished by Mr. Mink, $3,4(^,168.48 dcliveriHl to Jay Gould in payment of tlie securities. The WiTKKss. Yes, sir. DENTEB PACUfIC AGAIN. OT^' Q, I seo no connection really Iretween this Denver Pacific stock the atook of tbeUnion Pacific liailway Company. Why could not that Bumpany, the Union Pacific, have issued Us stock for the purpose of paying yourself and other creditors, independent of this Denver I'acific ■took, it having become an asset of the company by virtue of the terms Of consolidation !— A, Why, tliey could just ns well. , ij. Just as well! — A. Yes, sir. Q. Then this Denver Pacific stock ceases to lie an imimrtant factor In thia case, does it notf — A. Certainly. I really wanted that put in, because I wanted to get the guarantee of the consolidated company on liese bonils which Sage and Gould held on that road. Q. The only effect of issuing this stock was to increase the iudebted- eea of the Union Pacific Railway Compauy t — A. Y'es, sir. <). And they could have done that independent of thw Denver PaciBc took? — A. Yes, sir. Commissioner Littler. 1 think I understand th&t ^ p U. S. PACIFIC RAILWAY COMMISSIOK. The WiT?iES8. Tlmt is exactly an it waa. Q. At tliP time you sigDecI this »(,TWmeut with Mr. Amea aod oUieii- of Boston, (lit) you bave it in your power tu trunarer this Kaowu Pa^ Railway, wiib all ita brancbe«, to tb« MisHuuri Pacific if yoa desired T — A. Yes, sir. Q. You owDud acontrolliug intercHt in it! — A. Y«a, sir. Q, Youtben biul it in your power itabstautinlly to dictate tbe termiof this consolidatiOD betweeu tho Unioo Pacific aod KatiKaa Pacific, had yon nott — A. Yes, air j I snppose I hml, as far as tbose mads were c«nied. OODU> nATE TEANSFERBKD KAN8A8 PACIKIO TO MI880rBl PlCmC, Q. Vou conld bavo transferred the Kansas Pactflo to the Hliwrarf Pa*rific, and havu carried out the plan soggestetl by you y«*l«rtl«r, (a bat-u esttiuded tbu Kansas Pacific to Ogden, iu tbe manner yon inilj- cat«d, and thus bare formed a competiuf; line with the Union I'tdflt liailway Company from t'lrdnn east T — A. Yes, sir, Q. Anil it was becaoNc of the vantage gmund you ijcciipiod at ihu time that you were able to dictate the terras of jieace to ttiellnioiiPaciBii l»eople! — A. Well, no sir; Dot iu that sense; bec kind enouffb to state tit round uiiinberB tbe actual itofutl your holdings in Kansas Pacific at the date I have ineiition«l, including its bntncb^-sT You have given tbt;ui by it«ms In yoartetti- mony. 1 would likv to group timm together. — A. 1 would have to ntti to tbe account. This account shows t3,03A,024.9It. Q. Tell us what tbnt *ium repre^euUi. — A. Tbut represents tbe In- terest iu the slock aud in the certificates eotitllug the bolder toconsoli- date witether you lost any money or not. I^he WiTNE^^ I did not hme aiiy money. I did not muko nDymlor fclitf ooiiHolidAtiou, becaofe these Mwurities went wortfa us moch befin na vousolliUUw AS th«r vtcs afiui. JAY GOULD. 659 INDEBTEDNESS OP UNION PACIFIC APTEB CONSOLIDATION. By Commissioner Littles : i. I will ask you to give us the total amouut of indebtedness of the ion Pacific Railway Company after the consolidation, both in bonds I stocks. — A. The indebtedness was the combined amount, adding \ two together. commissioner Littler. I want to get at this point. :he Witness. The indebtedness was $124,215,909.60. J. How many miles of road did that cover i — A. That is exclusive of stock, and covered 1,821 miles. i. That is the bonded indebtedness you are giving! — A. That is the ided indebtedness. I. Now give me the amount of stock. — A. The stock was $50,762,300, uuk. /ommissioner Littleb. You have already stated that your pur- ise of Kansas Pacific, I believe, ran back to about 1874, when they imenced. 'he Witness. That was the Union Pacific. l^ When did your purchase of Kansas Pacific begin t— A. I think 7 or 1878. I. As 1 remember your itemized account, you purchased the stock of 5 company at about 6 or 6^f — A. No, 12^ ; they are half shares ; it iild make 12^. I. On the hundred ? — A. On the hundred. I. You hold that stock as you purchased it, and finally received the ck of the consolidated company, as I understand it t — A. Yes, sir. }. Your profits may be fairly ascertained by counting interest on ir investments from their date up to the time of the exchange, and ertaining the value of the consolidated stock, may it not t — A. That aid be my profits, yes, sir. J. That would be a measure of your profits! — A. Yes, sir. }. We will not take the time to figure and see how much you lost, if rthing. By the terms of this Thurman act the Union Pacific Bail- d Company was. prohibited from issuing any stock under certain ms. Ir. John F. Dillon. Pardon me, that is the act of 1873 that you re ; it is the Credit Mobilier act. Ir. Holmes. Here is the language, commissioner Littler. I understand what it is in substance. TECT OF change OF NAME OF UNION PACIPIO FROM RAILROAD TO RAILWAY. J. I wish you would explain how the directory of the Union Pacific naged to issue this large amount of stock in the light of that statute less it was in this way : That in order to avoid the provisions of that it became necessary to change the name of the Union Pacific Bail- ed Company to that of the Union Pacific Railway Company. — ^A. The isolidation was made under the charters under the acts of 1862 and >4. 5. I understand. There was nothing in the charter requiring you to ange the name of the company, though. In other words, what was 3 object of the directory in changing tbe name of the Union Pacific ilroad Company to that of the Union Pacific Railway Company t — ^A. was a new child then; they did not want to mix tb.^ wqasl^^^tsl^^ PACIFIC UILVAl' ( I know, bat could yoa not hare coDtinanl the o^oe nf eiOiivi^ 1 catapBtttliM T — A. I Oo not know whetber 3^on conid or not; it ] tmvii un;at«d a mixing of avcoant*. ,, IJu yoii rumember fairly well the faixtuiy or the iiilvauce iu Uietv KtookR.tltc Union Piieitic and the KansUK Pacific;. comtnGUi'iug viilil8*N »ni mnuing up to Febrnary, 18S0 1 — A. Yea, sir. (j. Did you iiud your friends associated in tbt'se oor|>uniliuii{i uwna c^nitrollin;; inturcMt in theHtockof tb« Kansas Pacific and Union Putflc iliiring uti tboHu years T — A. No, eir. i},. I)id .V(ni own BO larye an interest a* to be able to control tim luarkt-t valui- of lliusc Btocks dnrini; tbose years t— A. No, sir. Ij, Was tlieru or not any concerted movement on tbe part of yoantjf and oibtT iargo ttlockboldurM, acting with yon, to advance or to put thU Htuck down from time tu timet 1 ava that it tiactuated very muob.-. A. No. Hir. (j. That was the n>KuIar course of the market t — A. ThONeprlctHven made by tin; public that dealt in those KecnritieH. Q. Yon were not buying or selling eitbot of those stoclca, as [ reioeai' Iver, for a few months prior U> tlie final consolidation of th« DiiiOD P^ tntle with the Kiuisas Pacnflc T — A. No, sir. Q. Your holdings remaineil ationt the same T — A. Yes, sir. TBE TUnRMAJf ACT. t By the teirnis of the Thunnan act, a [wrtion of which I wtU nod- [ RABXCCGB nnOS FArino, 1S78-I8S3. 1 wtMh to vail yoor sttrntkiii to Um? n), iiMuaivocitig «itb IStS, The gnm ! KiultxMid CADy for 1SI% >• eOled of tbw property farrit nlngsof tbe Union I't- ia tbe fwp*^ 1 l>>ve befm JAV GOULD. x. HOLMKB. Ifiiilway or railroad 1 lommiiteioiier LiTTLKB. Bailrotvd. 'he WiiNEss. ftly recoUectioo is that it was 187G. But is a matt* «cord. t i- Did it eoutinop to pay dividends from ibat time forward ap^ I iDcludiDg lS8a I — A. 1 do uot know wbeu Uiey stopped divideudi B «ot reiiieiubor ; but, geuerally, 1 should say they did. flDENDS AND PAYMENTS OP UMION PACIFIC UWDEK TUUEMAN AW J. At ibe tjnie I have mentioned it appears that rbe Union Pacifl^ ilway Company was io default in the payments provided by the nrmau act, after its pasBage, and also in default in its payments nn the 5 per cent, net earuiug provision of the first statute. It ap ITS I bat tbe Government had i>aid. up lo the 30tb day of June, 18TS, ^T8(t,8gG inrereat on aceoont of tbe $:iT,UOU,UUO subsidy. Uuring t time the Union Pacific Kailway Company paid, under the provis- ) of the several acts of Congress, $7,iM)4,3ti4, leaving tbe balance inst the coojpauy, ou account of interest paid, of 4!),422,r)32. That ■g the coudition of the accouots of tbe Union Pacifiu Uailway Coni- >', 1 ask yon Io explain, as a director of the Union Pacitiu Company, ■ it was that dividends were declared in the face of those facts.- [ do not admit tho facts, to begin with. . Youilonotf — A. Iclaim that weiieverpaidany dividends, exce] uvordance with the requirements of tbe charter. , It' [his Huveral ruilraod companius li<K'''>l'li <'<»uliMif,n thai I he present Hneof teleftrnpliliotwiion Ibo MiMonri Rivpr and Sun Fnuii^EmoMif Ih> mov«iI iipou ur along Iho line of thuBHid rbilrond and liranrhro an fnat aallioniij railroad and brancbesare bnitt ; anA, tf ■aidarraiifeiDeutahoiild bo ratvrnl intn.vnj tlie IruiiHfer of tbe said tnlntirajib linn be luado in acooiduncc tbrrpwjlb, un Ibv '' uf Iho said railraad ami brantbuH] such tranolcr fnr all purixweN in tbi* net ■liU bold and coutild«rt^ a fiiHilliurnt on tbe p»tt of Ibc rnitmud croiupuoiR* of tbn,.. viirinn of Tbia act in regard to tbo tioiuitraotiDii of naid Itnv of IH(-iniiTib ; and lavMi> of d-'ai^roouinnt tidd tal«graph tompnnii'B ore nutboriXMl tu rouiuvclbeirliiiaiirtclt- KTapb aloDK and upon tbo lino of raltmad benin i!ont«niplatod, withunt pn^jniliM m Iboaaitl rnilroud coinpiiuy bvrvia nnined. Now, HH I ondiTslMiid it, lio utrre^iiieut was made, aud tli« Unina I'acifiv went oil iiimI umiatniutfHl under ito fnuic>iit«e under Ibmaiilirf Cougr(«8 » tolp^rii|ili line of itH otrii. Ciider tbe aalhority uf tliii iiitieteeiitb seciiou, which I bave ju^t read, these three telegraph b ]ituiie». which havi* an iudepeDdent line of telegroiih fVoni tbe MiMouri Kivf r to the Paeilic Ocean, al80 moved their liue of telegraph on t»i tli« i-iglit of way of the Pacific coni[>aui€«, all the way fW>iii Uiuaba tbroneli. CoinDii»«ioDer Littler. Do I anderstand you to say tbat a partnf th« funds of the Union I'aciflc went into tbe ctinstrnction of any | liou of that lint^f Mr. JonN K.Dillon. Of their own line of tdvgrajih; withatilu . to hAp|M>o that the Union Pacific bad one line of polM, b» I audentiand. It. on one eidi.- uf the n;;ht of way, and tbia indepeodent conipaoy bad another lelegrai>b line on the other aide. Cofunii«aiuni.T Littler. What waa that tiiM owned by the CQiou' Pftcifie KailrtMHl ComiwDy called t Ur. Joa>' F. Dillon. U waa a part of its telegrapb line ; a part ul ItM property. There was no indqwodeut oame, 1 aoppoflt;. CoiuinU«iouer Littles. What baa beoume of that tclegivph lloei does it 6tiU beloog to tbe Caion Paetie JUilwajr OompADy, vr bu a been tmnslerred t Mr. Joan F. Dilxon. 1 can teU yoa tiMi. Coaimi$cguaef Uttleb. 1 sfaoald Unnk Mr. Gould, M a dIreiMorlhMB I9T^ ooght In he able to tell JL TW WrrxEss. 1 think -t ras before my tiaw then that tbat oecoired. Q. It was before yoor (ine r — A. Te%i^. ^"^ mmmmuKT LmusM. WtUyoa c^ti,jadc«T r. JOMX P. Pnxnjt. Tlu»ia«raw|liifiilaMt •^WI*Ba*iaii. In tvaiml t» tk* Kmrnm Paofe OHUBtwaraer UlxLBL WbM hM tbat to 4» witk this I Mil JfMH F. Doxmt. A nty gnM 4md. Vh* GaJJKaA!!. CwuiuiMiuaar leing further examined, testified as follows: By Commissioner Anokhson : Question. Where will it be convenient for our accountant to go over this book to see what the result is f — Answer. He could go over it with Mr. Calef. Mr. Calef. At our office. EEFEREING TO POOL BEOUEITIES. Q. Referring back to the pool securities, which are. referred to iu IIip mortgage at page 150, it a]>pears irom the books kept for yoursoll' i"iil Mr. Sage, as trustees, that about $3,400,000 — the precise figure beinf! $3,386,269.07 — were issued iu exchange for the securities which are specitied at page 15G of thnt mortgage, and the book-keeper infonneJ us that no other coiKidenition was received by this trust, aa appears iu your accounts, for the bonds issued, and you yourself have stated tb:i[ those bonds were surrendered at the eommotation rates prescribed in the mortgage. Can you reconcile that statement with the figures ap- peariug in this account T — A. 1 do not know tJtat there is any differ- ence. Q. I gave you the computation yesterday from the commutation rate*, and showed you that the amount of bonds you would bavebeen eutitl«l to under the mortgage rates, assuming that the Arkansas Valley should be converted at par, were about $930,000 less than was octnally re- ceived. Referring to tbat computation, I ask you whether there is «>}' explanation to be made of the difteiencet — A. I do not know of «!■ I do not remember uow about it. Ouly Mr. Calef can explain it. Commissioner Anderson. The inquiry is whether t^e gentleoo psmed in the pool received apt6texfcQt\*V"ra.^OT\«>x,«nfl.yiefl^W8l»' JAY GOULD. 565 • B U8 show a preferential rate, unless some other figure was paid for the ids, which is not disclosed in the account. If there was any such er consideration, and it you know of it, we invite you to explain it. .^he Witness. I cannot recall anything now. I suppose they were tied just according to the pool prices. J. The next item in the book refers to 333 funding bonds, the par ue of which would be $333,000 ; 395 bonds unfunded second land Luts, of the par value of $395,000; the Solomon bonds $185,000, the * value being $185,000; income bonds stamped, $108,950; and the tement in your book is that the following additional amount of bonds eived from the company are to be exchanged for consolidated first- rtgage bonds at the same rates as taken on pool securities. Will 1 please explain why it was that those bonds were taken at a differ- i rate from that prescribed in the mortgage? — A. No; 1 do not un- 'Stand that. J. Is it not clear that the pool securities, were converted at a rate t'erent from the mortgage rate, since the rate of the pool securities is erred to in this entrj^ T — A. I do not know. I presume Mr. Calef lid explain it ; I cannot. I never saw the entry before. J. Do you know whose bonds these were that are stated to have been eived from the Kansas Pacific Company ?— A. They belong, I sup- je, to the Consolidated Company. Commissioner Anderson. Do these figures not show f ^Ir. Calef. No; they are company bonds, commissioner Anderson. Which company bonds f Hr. Calef. Kansas Pacific. i. The next entry in the book shows a conversion, or an issue, of 771,001) of these consolidated bonds, of which $1,413,000 were issued you for Denver Pacific bonds, and $358,000 were issued to you for \ bonds of the Denver and Boulder Valley. Was that your own .nsactionf — A. Yes, sir; those were bonds that I surrendered, and I »k consolidated bonds. J. Both of these lots were exchanged at par? — A. Yes, sir; I sup- }e so. J. What was the rule in regard to the conversion of the branch bonds par f Do you remember the requirements of the mortgage f-:-A. The ►rtgage will speak for itself. I do not remember specifically, but I lieve those went in at par. ^. Do you remember that there was a distinction as to branch roads ng east or west of a certain meridian ? Ehe Witness. As to future construction f [commissioner Anderson. No ; also as to existing branches. A. That is under the 24th article. j. That clause provides that there shall be no more consolidated bonds aed on a branch road than $15,000 per mile, i)er branches east of a ren meridian, and $25,000 west of that meridian. Is that not so? — That clause does not apply to this issue — the Denver Pacific. The nver Pacific and Boulder Valley went in at par. E VALUE OF THE DENVER PACIFIC AND BOULDER VALLEY ROADS. 3. Under what clause? Please read it. ilr. Holmes (reading): iBTlCLE 24. Said trustees shall hold the remaiuing six millious in amount of said isolidated first-mortgage bonds, and any such surplus as aforesaid^ upon trust, en thereunto requested by said company as aforesaid, to certify and issue the said itolidated first-mortgage bonds secured by this indentnxQ iu ^SA^'aa&M^ i«^ ^s:^ V. 8. PJICIFIC KAILWAT COMflSSIOX. ■04 MMpwjrrW ^MdtT m^ oth«r ■■■> ■■!■ tU nia.1 of wUcIt U touod I17 Mia taiaWMy, *t of lh> ito«fc of »fegfc wiiy— j mU Km mi Pitfiie Oompany mrw cot- trolnt M|)orH]r, hDj pftU vp, u Ml mmAbs Mr, i« w4 anMolidAM bonOn, pn- «M«dltet«aeblnotaCMdB^tarit7«r«U)di ■Cal]be4alj i^cdmI ,000 fnroARh miUnat of thr mrrlilian of Haiivht, ar^KfimOt i-m b inllu tvoBt tlicrnof, iKtaall.T cDiiatructml or in oprTailon, of tfaa rallrniil tta- miwil iu tbu miirtgniio ur il»il uf tmst ■ocarina tht^firnt-iuarlgMiKe bonila, ln«uiluuin fur whifli mill conimtiilftlod flTiit-iuortgM|!e boncla are iuund. Rkiil tTu«l«M aliaitlbdd lli(> boiidmu) neiinirnl in (•xolinttgi' npon tbp traata In Ihrne prawn t*. C'liniiilHsioticr Andekhon. The scDteoce \a»t read by Mr. Ualnife is i;mi|ilcil wHUtbo pn»5eiliiig part of the sentence by the wonl "ao^.* I would like to know whether the riaestioH as to tliu limit of bondu nbidi Khoiihl be titkeu at $15,001) or i'^5,mo wii» discuNSLH], in makiD£ tlii»- ezrlmii^cH of those Denver and Boulder botids. — A. The Uenvei' and Itoiililer bonds were oot to exceed l2Q.0UOa mile. (J. Were tht-y oa«t or west of the aienilian of Denver t — A. They nm WCKl. l^. West of the meridian of Denver t — A. Ve», air. ij. Who determftied whether the other conditions Htnled here liuii bien MiliKlictl or iiot — iw to whether theite bouda were t<'Uarant«nl b; the comitnny or whether the company had a eontrulliiig ammiDt or Ui^ Mtoek I — A. Those were coudiliona that were well known when the iHortfrairc was made, and those an- exchangea thiit were expected tn Iw inu4l(\ They wen> pruvide«l for in tlie mortgage. The Kaiiniis I'aciftc hud a inD.)ority of the stocks, and bcM tbein for a long lime, aiiit tliui ^iiarntitiit^l th<> prindpal aod iater^st of the Boulder Valley houiU. Q. What other hraoeh Imnda did yoa convert hcAiiles ItoiiklcT Vtl- leyt — ^\. IVuT^r racifip, (J. A»,voth«'rsf — A. t tlunk iM)t,tU[oepttb<>-- '' t^. I llnd a( i»t^ 1-2 of joar booka ■ tnaia- : nftitiintlldatrtl ba< ivf a.^)ii!tW«di4«r«f Jaaanr.iaaiL What «a« llidr market tsIw at iW tt«w^ t a— ti ■ ifco rerfc—ei ?— A. Iikaktbef wiaviiutantha onlM»|E». 1 1M»k tWi MaxwcB A Gnnakad aooic Ittigation orcWm "1 in,iiil liii ifciw lMl|ilfii IWfvtR f|hIiagUiiaiAueof booilt. Mt IHBfrf t— A. Agotd >flfc tfe* rates, and tkejr A ffnc maaj t4 tbem wm In- A«5*asl« ■» Acre, wfaitApati JAY OOULD. Q. You were at tliat time both Irustee and rewivur of tlie bonds I — . Yea. sir. Q. Did yoii talk with Mr. Sage about tUe rate T — A. I presuniu I lid, and made au offer to all the others, but no odo would take tliem. Q. In regard to tliis issue of 027 bouda, on tie 23d of Mareb, 1880. .tatcd to l»e issued to you for 7,016 sbares of the Union Paciflt; Central Jraneb stock, aud on aoconnt of payment for 10.000 slmres of Denver Pacific 8tock, wliat is your explanation of tUut entry T — A. That was 1 payment for that stock, or in part payment. be issued to you, except to the Union Pacific Company, and the Union 'acific Company used tbem in that way. Is that your understanding tit I — A. My recollection is that Mr. Dam brought me those bonds as easurer of the Union Pacitic Cbnipany. Q. If the Union PaciticCompanyoweilyou a certain amount of money or the Central Branch, what right had you as trnst^e of this mortgage o pay that obligation of the Union Pacifle in that way T — A. It was lot paiil direct to me. The bonds were handed over to the Union Pa- "■flc. Q. That is what I supposed. I ask you that? — A. They made the lyment to me, Q. "So that the Union Pacific derived title to these bonds by reaRon if certain escbauges which they themselves had made, and then iis«d ' lem in the settlement with you I — A. Yes, sir. Q. I Bud a large amonnt, exceeding 92,000,000, chiirged up in your lOOk as representing discounts on these bonds. Do you know how bow discounts came to be ajlowed I— A. I }iresume Mr. Calef can ex- ■Isin it. Q. Do yon know that in a number of the negotiatiouH of these bonds ley were taken by parties, not at their face value, bat that a dlscoant '88 allowed, as there was to you on the #2,000,000 ! — A. I do not re- pember. Commissioner Anoekson. I find a number of entries in wbicb thi» r. Leigbton is coucernot^l, who bad a litigation, I believe, concerning liese liouds I ■ The Witness. Yes, sir, Q. Were there a number of iiersous who brought suitt — A. Mr. Ca- lf caii tell yon. I think tbere were several. Q. As a matter of fact is it not tnie that a great many of these bonds ere issued to parties by reasou of those suits, or for other le^tsoos at ttes diSerent from the rates stated in the mortgage f— A. I think so. Commissioner Anderson The books show that to be so T Tbe Witness. Yes, sir; but in the account with the Union Pacific bey paid that diQ'ereuce. We charged them that difference. Q, That is to say the account, as kept with the [Tniou Pacific, will low that you are able to comply with all the requirements of the uiort- Eige if all those items are correctly entered in that account! — A. Yes, r; we acted in all these matters in acconlancewitb the iustractjons if tJie officers of the Union Pacific, the trustees taking care that tho Imitr did not exceed the amount of bonds to which they were entitled. Q. Tbe effect of that wontd necessarily, or might necei^sarily. de- ease the surplus of bonds that might have been available if the strict lortgagfi rates had beeu adhered tot That is clear. If uU the oat- landing bonds had been retired at 30 and r*0, and at pur, tfa«n you ronld have hnd a ranch larger surplus than has been tbe result from le aotaal fact T — A. Yes, sir, vho bonds went up in tbe market, and U. S. PACIFIC RAILWAY COMUISRIOH. ^^^^^H jiurtifH woold buy np tlioae boiidBespecting to be bon^bt off, auilnouH iiniioy tUe conipaiiy. Of course llie couipimy would carry it on np ton certain poitit and then make a ba.rgaiu and buy Ibciu mil; nuiltliui some oue else would crop up. But we took cai'e always to si-e lliut 'Iierr was no over issue ol' tbe bonds. NO OTEEISSUE OF BONDS. Q. Ill order to make your account goo< . _' ril" htinloafter fixed £ot auch eon vers ion ; and third, w-hea nuiic ui mi- him mciiiiiiwi' lintidB can be obt-ained at the prcHcrihcd rate, tbun in redeeiiiiuK or buying th« l>o°"* Hi-cured by these presents at the lowcnt price for which said bonda can be bid, n* nsceedios principal and accrued interest. Commissioner Andebson. And your construction is tbat all moiK]^ including the proceeds of lands sold in pursuance of your tnift, veK applicable by you to the payment of tbe interest on tbe issue of coo- flotidated bonds, and that if that interest was in fact paid by tbe CdJo" Pacific Bailway Company it was entitled to a credit for that HDOODt 08 baviug been paid for ^out BAca>:L'at\ JAY GOULD. Tbe Witness. Tlmt is tlieir claim. That is tlic positiou tiibeu hy the Uuiun Pacific. Ttie trustees have iie^^er quite conceded iJiat, anil have never takeu that inLo accouut in ttie issue of bonds. Q. lu the account as stated, and which resulted iu October, lS8(i, in bein^ about «vea between the trustees and the couipanr, do they stand credited with the interest accruing on the consolidated boud^^t — A. ^o, sir ; IbaC would make the surplus due them, it' that was allowed. Q. 'I'lieti is there any other it«m of credit which is given to tbeiu, ^liesides the credit for surrendered securities, iu the account as stated f — ,-A. Nothing that occurs to me. Commis»iouer Anderson. I will ask you, Mr. (Jalef, is there auy other item of credit to the Uuiou Pacific Kailway Oompauy, iu the ac- oouut, as stated, except the surrendered securiticit t Mr. (JALEP. So; not in the account state,UOO of bonds to you at tl,5(HI,00U, was Mr. 8age ever interested with youl — A. No, sir. Q. lie paid no iwirt of the floating debt! — A. No, sir. Q. Do you know anything of the traosactiouu in which bonds appear to have been issued to Mr. Sage at a rate different from the mortgage ratesi — A. No, sir. Commissioner Ahdebson. That is all we want to ask now. The Chairman. J udge Dillon, did 1 understand you that you wanted to ask a question t Mr. JOBN P. Dillon. I wanted to ask a few questions. The Chairman. Go ahead. KEPEBBrNG TO CONSOLIDATED MORTGAGE. n by Mr. John F. Dillon: il reference to the consolidated mortgage, I call your attention ?fact that it puts into it all the railroads and the lands of tbe iompBDy and certain personal pi-o|ierly, aud provides for an issue of (30,000,000, of which it sets apart $24,000,000 lor the purpose of pay- ing the underlying liens, for instance, tbe first mortgage bonds, &c. tFtaen it contains a jirovision that the company had contriieled nitb IBidney Dillon, Russell Sage, and lAnry Villard, holders ol certain euu- Ited bonds, the auiounts and character of which are distinctly stated ^nstrameQt, aud which it is provided shall be exchaii8«(l|| ly stated g«(l||^y| V. 8. PACIFIC RAn.WAY COMMI88IOIf. pnrtftis nmnbtr, t3,-UKl,(l(>0 in aiiinurit, of tlie couHOlidatcil llrBt-ini>rt> (>aiio ItnndK. It further pr(ividfi8tlu).t.Ri>rlAin HcvuriUflH, wliieh areali«wl ill lieu of tliiH$:tCl,000,etweeii the company, or jiartien intrreMnl iu the company, and tlieui' truHteeH. They repruttenttti the holdi^K ofi huge majority of t)ic bondu ; it in very dettirable toget them eommitt«il; Ihiit wan a special bargain iiiwle with thoni, ah I remember It now. Q. The mortgage nota that out ou the flwe of it! — A. Yes, sir. (^ So that everybody taliiDg boudH under tltitt mortgage knew tliU a certain amount of conaobdat«d tmuds were Ui go iu paymeut ror,arin exchange for, the enumerated underlying bontlHf — A. Yen, air. Ij. And the truat van admlnitttored on that theory, waa it notf— A. i>li, yen, ntr; certainly. Q. Now, calling your attention to Article 22, In vbioh CitmmlMiuicr Andertion has referred, it [>rovidea for the iattue and <:ertitteutioi] of Iheite lionds; referring to the contract, in terms, with liilbtti, 8afe,aiul Villard, bolbre reciteil — Aiiil BM tn utIiRr lioniliinot cnuiprtHml In tbd*ali1 contract at arii(« i>f *xohiii^iiM (■xc>«4lng (hat In tlm nnlt nrllcW hnrnlnafMir «poclfleil, oiid, Mconitly, w tii til mill- ion* lli«uii>n]|tol'iialnt onii titnit- after MpmiiBml, or Tar tlio pnTpaMo if provldUig fUiiilH I'or tha couMmcIloii omilnnlM of bnuiohei. Th(in Artitiie 23 providen that "said tni8teeii nhall hold ho uuchof Kiid (2-1,000,000 of bonds as ia not required fot exchange," under cer- tain truHts spccilled in that article. Now, sincti it is expresal ,* providd that all tho Huid Itondit, coupons, interest warratits, and fuudedintemt ccrtilloatoH shall bo cxubanged, and then any surplus Kball hv held for certain other purposes, 1 presume ihe conatructiou which you put upon Ihis mortgage was, tliat if any of the bonds which were rocited htre, to be taken in iit par, were, by tho Onion I'aciflc Company, tut th« rho cesser of the IvansaM I'acillc, brought to you, you were antboriiwd 10 exchange at p^r, although they may have got them for less, and thul if some of tho other bonds were purchashed for that company at al»v« tho mortgage rates your construction of the trust was, that if yua ilul not exceed in all the limit here in the twenty thinl article, you vm aiithori^ud to issue tho consolidated bonds!— A. Yes, sir; that wa»oar rule. (J, That, 1 think, is a sound construction of the instrument itwir. What was tho scheme of this mortgaget These underlay the mwot. consolidated bunds f — A, Yea. sir. We know perfectly well thalJailgB Usher, Mr. Holmes, and mysolf knew perfectly well what this mortgnge was and what we intended to do. We got it np, and when any ijbw- _ tion eanie up, of conrse I went to them for ailvico. But I kiunr irbit K the intention was. ^^^ KO OVHKISKtJK Ol' IIONDM. ^^^^M). Under that eonntnu'tlon of tlie mortgage, as yon nnilerHtaiidil, ^^^^Hve bas been no overissne of bondi^ under this niorlgsge I— A. Su, r JAY GOULD. Q. Do you linow, uud can yoii stntc, wlicther bonds remained auis- BL'd and aaco'tified fiuQideut to lake care of all the truste of thiij lOTlyra^e; Ibat i« to retire all the onlstanditigitiBties, even if they bad p be taken id, all of theiu, at pai* T The Witness. All the underlying securitiettl Ur. John F. Dillon. Yes, sir-, all that are outstanding. A. Yes, sir. Q. Yonr attention was vailed to a detailed list of the tweuly-uiue ranches of the Union Pacific Company, and you wera asked whether ea now had, or ever had, any interest in their uonstruction or iu their Bcorities, and I underatood you to answer, with the exception of two, bat you had not. Am 1 right t — A. Yes, sir, Q. Those two were the South Park and the Utah Northern T — A. Yes, HOW THE UTAH NOHTHEHN WAS ACQUIRED. Q. Will you state briefly the circnm stances under which the Utah [orthern was acquu-ed! State through whom and why. — A. It was little spur of a road which ran from Ogdeu uorth through a Mormon Bttlemcut iu Utah, and the Mormons had furnished purt of the money, Dd a gentleman, Mr. Joseph liichardsun, had furnished the balance. fcey had not made much out of the road, and 1 saw that it was turned awards Montana, which I thought was destined to he a rich mineral Ijnntry, and I opened negotiations with Richardson. I first proposed le Union Pacific should take that interest, and get a control of it. It id not strike Mr. Dillon favorably, and he rejected it, so I took it up, bought an interest and began to extend the road. I took the bonds " block of the company. It gradually began to pay, and it became rofltable. Th^n the dirt-ctors saw that when it was extended Uf Mon- aia it would of conrso become not only a great feeder to the Union icific but a source of profit in itself, and they asked me if I would t let the Union Pacific have it. I said, "Yes," and I turned it over to Bm at jnst what it cost me. I think I got the bonds at about 40 or ^ and the stock free. mmissioner Littlee. Judge Dillon, that road is 400 miles long, I r^jorted now. The Witness. It is now. .'Commissioner Littler, You extendeil itl 'The Witness. I extended it after 1 bought it. Q. One of the wondrous revelations of Mr. Pondir to the Commis- an was that he said that Mr. Bichardson had said to him that he had to ^e a bargain with you personally in order to get rid of the road. ftve you anything fuither to say in explanation of that stJilement than lat you have already stated?-:— A. Ho, sir. It was a voluntary sale • hitD, and it was all that the road was worth at the time I bought it. was not paying. It was a poor thing. Of course railroads need a B«terhand and a development to make them pay, and Richardson a too stingy a man himself to develop ir. X). The iwiut I want to get at is, did yon sell it to the Union Pacific i what it cost youf— A. Yes, sir; just what it cost me. Q. And it has turned out to be a very valuable road, has it nott — ^ Yfi8, sir. THr John P. Dillon. The siirpUis for 188y, I see bv their reports, ■" 8 1390,000. IT. S. PACIFIC BAILWAY COMMISSIOS. ttieroadt-JI 9. *' i By the Cuaikman : Q. Will you just Btate wliat .YOU paid llichardsou for ttie I (to not know whether 1 paid him iO or 50 for bis bonds. Q. Either Hi or 5Uf— A. Well, I wigbt bare paid him a, little tugbv, but by boildiDg the road ou and takiug the bonds aud Block thepmt got down, 8o that when I turned it over to the Uoicm Pacitic it vull or fiO. I might have jiaid Uichardson more thau that for bis, Ity Comuiissiouer Andebson : (J. Did be throw the stock in, or did he set a price for the stock I- A. I think the stock went in ; I think in buying of lticban)8on tbtt was the case. By Judge Dillon : Q. Wbalerei' proht was made in the transaction inured to tbecon- pauy aud not to yourself t — A. Yes, sir, Q. The only instance in which yon stated you had ever had any iH' terest on any of the branch lines of the Union Pacific waa the Deovu, South Park and Pacific road. Do yon recollect the year that tbatn» purchased!— A. I thiuk in 1880. PURCnASE OF DENVER, SOUTH PARK AND rACIFIC, Q. Can you state briefly the history of this purchase by you, and «lij you j)urchaseditt — A. I bad an interest in thQCOUHtructiouortlienHMli a minority interest. The great bulk of it was owned in Denver hy Governor Evans and a party of gentlemen there. After tbey got tbe i'oa, on 102 mile* t996,ffll » For 18S1, on 213 milps 309,7579 For 1RB2, on 261.2 wiles SH.Wtt ForlH83, on312.6ainileB 4fl,T«» | rorlBB4, deficit, on .■M0.7 mileB 293,993 2 It appears in ISSO, from this statement, that the netearnings were,iii round nnmUers, $1,000,000. That was the year in which this road was purchased, was it uott— A. Yes, sir. Q. Will you resume your narrative as to the circumstances under which, and the reasons for which, this }inrcbase was madef — A, The amount of business that this road was bringing out to give to some Eiisteru road was very great. Italso furnished a market for a very largf amount of the products of Kansas. In the mineral country they have Id bring in everything the.y use. There was another purchaser fortbis road — ihe Denver and Ilio Grande. I was afraid that if the Union F*- cific and tbe Kansas Pacific, and those interests, were deprived of occtu to this country, it would shut off a large amount of earnings on their main lines, and 1 went out to Denver and saw Governor Evans, who represented the Denver and South Park. I found that this sale wu very immiuent. I staid there and succeeded in buying them out I paid them par for the stock and took the control of tbe road. Then I oflered it to the Union Pacific. I oflered them the first refusal, ami they took it JAY GOULD. 573 By Commissioner Anderson: Q. At what price? — A. At the same price. By Mr. John F. Dillon : Q. You were cognizant, were you not, more or less, of the negotiations which were had with the Rio Grande people by the Evans party for the sale of this road? — A. Certainly. If we had not taken it at that time we would have lost it. Q. Was the offer which the llio Grande people maerty, was to prevent its falling into the hands of parties bav- ins rival and competitive railroads f — A. Yes, sir. Q. Does your recollection enable you to verify, in a general way, the profitableness of this road for the two or three years after the purchase ! Does it coincide with the reports that I read to you from the company's books 1 — A. Certainly. It is very profitable. Q. This road was afterwards extended to Leadville by the Union Pa- cific Company, after its purchase ? — ^A. Yes, sir. Q. What relation did Leadville sustain at that time to the railway traffic of Colorado f — A. Leadville was the great mining center. Q. Are you familiar with the famous contest between the Bio Grande and the Atchison companies about that time, for the control of the gate- way up to Leadville?— A. Yes, sir; I think I ought to be. Q. Do you recollect that, at one time, the Atchison Company made a lease of the Kio Grande Company? — A. Yes. sir. Q. And the courts afterwards declared it to be ultra vires. Do you recollect whether that event had then transpired : that is, whether the £io Grande was then out of the hands of the Atcnison Company at the time of the purchase of this South Park property?— A. Yes, sir; ir isras out of their hands and had been extended. It had been extendeii to Leadville. I had the control of that, you know, at the time this liti- gation was settled. Q. So that, at the time of the purchase of the South Park road, tht*. Bio Grande Company had reached Leadville ? — A. Oh, yes, sir ; and was doing an enormously profitable business. Q. And had a monopoly of that business by railway ?— A. Yes, sir. Q. And the South Park was extended towards Leadville, and with a itirtber short extension could reach them. Was this element considered been equal lu < JAY GOULD. ^BfW^^^ fi75 teen equal lu tlie )mr tlivreuff — A. 01t,;eH,Bir; it vas a very Kfo^'Og TOp(!r(.v. Its eurniugH were iiicri-asing all llie lime, aa tLe bumoess ut' 'le fouutry iooreiuted. Q. Ttie tmiiHciript of tlie offluhtl sates uflbeSluuk Exchange of Jaii- jy 14 showH large traut<»ctjuijt) in U Dioti Pucitie stock at 92—89 to 92, 111 iu KaoHas i'licitic at 05 aud 06. Tlie uontraet wae that you eoUL sea Saint Joseph liiidge bouda at par, the stock thrown in, lo be pud thu stock of (he Kunaas Pacific Company, was it ! — A. Yes, sir. Q. Thensfore you realized less than i>ar, by the terms of the coutraot, - the security ! — A. Yes, sir. Q. Turning uuw to the account which you rendered of yonr pur ibases ut' what is headetl '^ Saint Joseplt and Denver Railmad first aoitgage bonds," which I understand to cover the Saint Joseph and 'acitio and the Kaosas and 2y aomelNKly. Do you know anything aliout any fictitious sales, or "washed" salesT — A, No, sir. It leaked out that 1 was buying, and ibat was the reason I had to watt until I could get them all in a lump. Ah soon as it leaked out that I was buying them they began lo grab for them, aud they carried the price up, but 1 never made any transac- tions in them other thau those. , Q. And then-fore ihomurket jirice, or whatever they did sell for, was It normal price, so far as any agency of yours was concerned T — A. Yes, Wr; it was made hy people who were trying to keep company with me, ^i BUp{>ose. i^. What was the reason why Mr. Sage and these other gentlemen, who were recognized to be large owners iu the Union Pacific Company, madeapurchase of these subordinate amounts! For instance, Mr. Ames. 41,009,000; Mr. Dillon, 9200,000; Mr. F. Gordon Dexter, |30,000, ami ]Ur. Ellsha Atkins, $3U,UUU. — A. After I bad made this purchase 1 said to those gentlemen, knowing that they had large interests in the Union Paciflu, that I had made this purchase, and showed them my hand, and told them that they might take what portion of It they wanted and I 'would take the balance; ami they partitioned off such part as. they wanted, and I took the balanci-. M EVACinc BAILWAV COMMISSION. I-ROI-ECrmO THE union PACIPIO PBOH the IOWA POOL LOB. Q, Wliat vri-rv llitr nititlveti ur iii«l iu iltv Uiiiuii I'tiviOc, uod I whii(<.'(I Ibis uiitlet to iirolt«t 1^ iwmiiiin.v agiiiiiet tbv u^mbiuntiuii of tbv iouu [k>uI lliitw, wbo wen tr; iuK to fuixc Ibv L'uiou I*a<^ilic >y*t««o( Ka«t«ni ruiulH tbut wtfrv uot iu tbitt vouibinaMoti — tbv Ilsiimibal ul Haiut J(MM.'])b uufori>, as I uudenttund it. In 1l>i:> pordiat of tbc^Ku ftet^nrUiuM van to protect yonr iutervHt in tb« Umoti Paottt proiRTtyf — A. YL'd, sir. \Vt« bad bud a can test witb lb<- In" i f-w-lt before tbid |>ur4.-ba»e, wbilo Mr. Ituiid was tbt< n-wi vi*r. '!' tbat Ibi-y bad pot iho tbint; tiled no tbat tbi-y could !■ i'ucitic to prorate. We found it out, and went tu Mr. I u Imrguiu H'itb biai for llie uhc of ibiu road. On tb>' -i were fjoiug to foree tbe Union I'aeille to prorate we tiirind IIk mLim traffic rigbt down over tbw roail. Q. Who itctually did thatt — A, We afitually did tlmt, and of roiuw we Haved tlie company at tbat time. But I Itcpt iny eye on tbi» prof, nrty an being wortli NomathinK for Jnut Hucb a protection ax tbat, ud at variouft timen aaid to 31r. liond, " Wbeuevvr your people iin> IM. out there come and aee me." Several times be csme, and ttald ke tbonght tbat watt the ri^ht time. 1 made a price, and tlnally 1 founl wbenever I made the pHee that they put one a little up, no I uU, "Now bring m« an offer." He brought me 40, and 1 accepted it. t knew that, the proiierty, iu looking to \tn futun', was growing, ani woubl bfcoine vnlnable. 1 eonld nee Ihat ev«ry lime f went over ifce road WW towim wen-, growing up and immigration was iMiuriDj* in. That lell« the »lory. Thii OiiAtRMAK. Still, you hud not lost Anything in efTectiiig your purchase T The WITXK8S. No, itir. L did not etpeot to. I knew the pTopertjr wiui good. Tbc Chaibmak. You do not want to luipKas tho ComtDbision witk the idea that you wcru at a lOMt The VVlTNl''.Ha No, Kir; I only want to give the molivt; Hint govoratd roe and tbo factit about it. 1 have nothing tu conoMi). Ity Mr. JoUN F. Dillon : Q. Perbaps tho Couiiut8H)on would like to hear your view conceniiDf! Uie sitinktioii of the Union Pacific. How many nmdN eoiue into Council jgoiithe lowasideT — A. Therv was the Chicago and ^iortliweiiUtni, ibiiicago, Itiirlington and Quincy, thu Cbivago, Hock iHlaud and fio: 1 think tbree. . Tim Wabaehl— A. i do not think tbo Wabuli was built at that J. Sir. John F. Dillon. No ; it was not at tliat time. A. llien tberu wuh tbu Council Itlud's roivd. Q. Tbu .Saint Joseph and Council Bluffs t>~A. Y^iw, sir. Q. In 1S71) aud 1880, bad any of those roads tbat oom«- iu at Couucil Bluflk, and tbere, meeting tbo Union Pauilic, dfUvt-r tu the UnioD Pacific their traffic, and receive from it its traflic., invadt-d tbe Uniuu Pacific Tc-rritory iu the we«t, in Nebraska I — A. I thluk tbe Chicago, ■""^rilo^tun aud Qulucj \iaii. JAY GOULD. 577 Commissioner Andeeson. Do .you ask in 18S0 or 1879! Mr. John F. Dillon. 1879 or 1880. The Witness. The Chicago, Burlington and Quincy had, and per- laps the Northwest had, a spur on the north. EMBARRASSMENT FROM HAVING NO CHARTER POWER. By Mr. John F. Dillon : Q. Did you ever feel any embarrassment in dealing with the Union Pacific property, by reason of having no charter power to protect its territory from invasion, as you call it, by rival companies? — A. The company was greatly embarrassed by not having the same rights that the other roads had. If they had the rights at that time, and the credit, to have gone ahead and occupied the territory west of the river as I planned, the stock would have been worth 200 to-day, but while they hesitated and lacked the credit to go ahead, these other stronger companies plunged in ; and, of course, the building of competing roads at lower rates is what injured the Union Pacific. My plan was that the Union Pacific should go.ahead and occupy the whole .country west of the river, and bring the business to the roads east. MANNER of PROTECTING A ROAD. Q. How does a railroad manager protect his property when he is threatened with invasion t Does he not try to carry the war into Africa ? — A. He has to throw out feeders, to get the start in building lines; for instancy, if there is a rich valley that is just developing, if one road does not come in there, another one will ; but, if the stronger road comes in and occuines that valley, the others will probably keep out. Q. That is one way of protecting themselves, by throwing out branches and holding the territory f — A. Yes, sir. Mr. John F. Dillon. You stated the other day that in November, 1879, when Commodore Garrison was the owner of the Missouri Pacific, he was threatening to extend that road into the territory tributary, as you claimed, to the Kansas Pacific, and that you said to him, '^For every mile you build west in my territory, I will cross the Missouri River and build into Missouri, on your territory." The Witness. Yes, sir. Q. In the present legislation applicable to the Union Pacific, it has not the ordinary faculties and powers of protecting itself that the Mis- souri Pacific has, for instance, has it f — A. Ko, sir. THE union pacific HAMPERED. Q. In other words, when the Chicago and Northwestern proposed to invade Nebraska and the territory naturally tributary to the Union Pacific, the Union Pacific had no means of crossing the river and get- ting into the territory of the Northwestern, had it ? — A. No, sir 5 it was tied hand and foot, so to speak. HAS NO PRESENT INTEREST IN THE UNION PACIFIC. Q. Now, while I am on that subject, there is one of verj' great impor- tance as connected with the Union Pacific, and especially referred to this 37 P R •? 1 PACIFIC KAILWAY COMM18810.V. OommisAio'n, oatnely, the systvin of bnuicbea ; 1 will ask j-on, Bm, whether yoa have iiow any interest in the Uuioa Pacific t — A. So, tie, Q. No interest t — A. No, sir. Q. Not as stWikholJiT T— A. No, sir. Q. Are you abonciholdert — A. No, Bir. Q. No interest whatever! — A. No. air. TUK BlULDli^O op UKANOHEfl. Q. Were many of thene ttrancihes built while ynu were councct«d with the company's administration t — A. Yes, sir. Q. What were your motives for favoring them t — A. My motive vu this: 1 thonght that tho Union Tacilio should t>ccu[>y tJie ttirriuiry tributary to it, and throw ont feeders that wonJd bring rbe buHlnwsiD to thB main line, and kfop jiace with the development of Ihe irreat \Vm. occupying tbu otintry tin fiutt aa, or a little fuster than, the popiiliUioa went in to Bustaiu it. Q. Aru you familiar witli the mode in which these branches were uou Ktructcd by tlie Union I'uciGot — A. Yes, sir. Q. There are sumo twenty of tlient, more or It-ss; do you know of wyr cuustructiou company ever being organized to build theHebTHnohi»!— A. No, 8lr. Q. Did you ever make, or do you know of any director, makiiiuaii; individual or personal profitoutof the building of these brauub litHet— A. No, sir, Q. Or any of them I — A. No, sir. Q. As far as you know, were they built at the actual cash cost to tlM company ! — A. Yes, sir. Q. Whore did thu means cumv from to build them T — A. TliL-rdnijinuf furnished the means out of its earnings, or, in some ca.-« - Q, So far as the meaus for the construction of these i: furnished out of the company's earniugs, it wasavolun: the directors of the policy of appropriating earnings i" rather than to distributiug them in the wayof dividend. w:i-. u [lui T— A. Yua, air. Q. What, ill your judgment as a milroad man, and an familiar »itii this proi>erty, would be the eSect of disuuiliug and dialocntint; then branches Irom the comi>any's subsidized or main lineal — A. Theywoalil moke a great shrinkage in their earnings ; probaiily ime-balf. Q. W*hat was, in your judgment, the fair value of the Saiut JoBepb and Denver Urst-niortgage bonds in Junoaiy, IStiO, |irif»r to the eooM- idation T — A. They were worth par in cuab. Q. What do you base that estimate D|K>nI — A. Upon ibe impei^ itself, and the bonds i>er mile. Q. How much was the indcbtudntWM per nilet— lA. It waaaMtt •17,00(1 iK-r milt-. Q. That is a low indebtedness for ttiich a rtmd aa tbatf iBitatHi—k^ '*' Lain The pn)[>erty had just paxaed thronglilbeardaalofsriefliiid mt to a [Htint where it was going to grow voy mpidly. 1 mv Ihax. nnbseiinent n-sult has shown it. 1 want to axk you in regard to the Central Bmicli Cdkio PauiSc iDtravt that juu introduced here, the original coatnct with OiV 068 for tlie vratRXiast ol a m-Ajwv\t5 wl Viife C«Biat3i ^w«i»2a «s»i-, ^ JAY GOULD. Aated on tlie 7th day of November, 1S79. Ynu proilucetl tlie original Botttnict, did yoa notT — A. Yes, sir. Q. The entry on year books for tbat purchase is not nntil December t. I suppose that is because the stock was not, perhaps, paid for or de- Bvertid nntil that time T — A. Tes, sir ; I presame tbat is so. Q. Then nearly all the rest was pareha«ed November lltb and No- reniber IStb. That is, paid for, althongh I think the options were at an earlier date. The account rendered here truly represents what you act- Dally paid to Mr. Oliver Ames for this stock, does it not t — A. Tes, sir. Q. That purchase was made prior to the date when you purchased the Missouri Paeifici — A. Yea, sir. Commissioner Anderson. Is it a purchase or un option, judge f Mr. John F. Dillon. It is an absolute contract to buy. Mr. Ames lella and Gouhl buys 6,250 shares at the price of $250 per sbure. MOTIVE FOE PDBOHASING. Q. Will you tell the Uommissiou a little more in detail than you did ttie motive that led you to make this purchase I Give the reasons for Jt.— A. The Kansas Pacific had an important branch, the Junction City ftnd Fort Kearney, which I was extending west, trying to get ahead of the Ceutial Branch. But we got neck to neck, and we were both bailding parallel roads right west. Q. How near together T — A. Sometimes right close together. Some- times I think we disputed the right of way. Then we would Ret a little vays apart. After we had got about 20 miles built they came down to Me me, to see if theie could not be some settlement made, and they flnally pr(u>osed that they would sell out. They made this price,andl l>onght them out. Q, (Showing a map.) Will you show what it was on this map T — A. That must have been the Junction City and Fort Kearney road. Q. W^here is the beginningT — A. TAenver, what would have been the effect on the value of the Kansas Pacific X — A. It would have hurt it at that time. That was the principal reason tbat Mr, Ames wanted it included in the consolidation. It was to pro- tect the Union and Central Branch west. By Commissioner Anueeson : Q. Mr. Fred. L. Ames! — A. Mr. Fred. L.Ames. By Mr. John F. Dillon : Q. Your jmrpose then in purchasing this property was primarily to enable you to protect the Kajisas Pacific property, was it not? — A. Yes, sir. Q. I will ask you at this point whether yon sold stock at the time of tbe consolidation at any personal profit to yourself, or whether it was sold to the Kansas I'actfic at precisely what it cost you f — A. It was sold at just exactly what it cost me. Q. Was it sold to the Kansas Pacific at your instance, or hy reason of wiy urgency on your part, or at tbe instance of others! —A. It was sold »t tLeir instance. I wanted to keep the Central Branch and the Kansas Oentral out. I did not want to pot them in. I wanted at least to take those for the Missouri Pacific I tntly at— I T^u .Ton gtn T»» pMd him and atben »l3L^9li£ fhc tin iharm of stock !— A. T«ft. dr. Pacific r— A. re», «r. itred the atwre boD<]s ami aXaek in^AMOgt .Iks Cnioo PacilU; at iku t — A. \r*, mt. «■» that put JD T— A. Ic VM fnt in tm thv buisAf ' m macb »» Mock, with the Atuck of Ibo Ktam 1^ rRiMt PjtfiOc w»nh at abmil tlutt thnrt— A. Abcmt uutlaj, irHlioot intm-Ht, wm abtmt iMSi^?- Kbspwuf Tniim Pa4^lic)KtiM:k. M7S.U>l)?--A. Y)«. B«U It a* nnrth nlmilE U3, wti* M;ccKiitt almut balABPn 11 ;<<:t iuiti thv Kiiiiftia I*uci&cnf^A. Hi. iiiwLii: ;bos« twi> roods go tu— the Centnl Bnunli JAY GOULD. 581 Your Btatement, therefore, is that it was not put in at your in- ce or insistment, but that it was by the insistment of the Boston y ! — A. No, sir. 1 wanted to keep out those two roade. I thought ght to have a little out for the Missouri Pacific. Did you regard the Kansas Central stock and bonds at that time eing worth what were got for them ! — A. Yes, sir. WILLING TO TAKE THEM BACK. You had paid that for them, had you not! — A. Yes, sir; I will that road at that now. You will take that road at that now! — ^A. Yes, sir; certainly, and kly. flow is it about the Central Branch! — A. I will take the three 8. The three roads that you put in!— A. Yes, sir; right off ; this ite. By Commissioner Anderson : Which three doyou mean ! — A. The Baint Joseph and Western, the Central Branch, and the Kansas Central. Do you make that answer as to the last two ! Do you know that Saint* Joseph and Western has been sold ! — A. 1 took that into ac- t. Will you make that answer as to the Central Branch and the Kan- Jentrai ? — A. J would as to the Kansas Central, and I am not sure that I would as to the other. But I certainly will take the three, ^mmissioner Anderson. You know it is impossible to give the 3, because you know the Uuion Pacific has sold the Saint Joseph Western. 16 Witness. No, it is not. They could account for it. I would the whole thing off the hands of the Union Pacific, and they make »ss on it. But I do not think it would be quite fair to give them iweet and I take the sour, inmissioner Anderson. There was some sour, then. WILLING to pay CASH. By Mr. John F. Dillon : That is to say, you will put yourself on record here as saying: that 3 Union Pacific will account for what they have received for the t Joseph and Western, having parted with it, you will take the ral Branch and the Kansas Central at what you sold those two s to them lor ! — A. Yes, sir ; cash. •mmissioner Anderson. Perhaps they would want to pay you in ►n Pacific stock. le Witness. It would be for me to pay them in Union Pacific c, because that is what 1 received. immissioner Anderson. If you went to pay them in Union Pacific I you would make a nice turn ! •mmissioner Littler. He proposes to pay cash. le Witness. 1 would make it a cash transaction. By Mr. John F. Dillon : . How long was the Denver and Pacific Kailroad ! — ^A. One hun- •miles. PACIFIC RAILWAY COHUISSIOK. Mr. IToLXE^. Od«^' Liimlntl nnd eix. Tliw WiTMESS. Our liamlml ami sis miles, Mr. Holine* «Ay8. Q. Pamlk-I with iliuCulorHtluCi'iiEmlf— A. Yes, sir. ij. lU'twccii l>eiivfraiid Cbejciiiif ! — A. Tes, sir, i?TiV(T I'ncillc |tiT mil*' I— A. It is $^5,000. Q. Twenty-four tliousund ilolliifB. or 925,000 1 — A. Tweuty-fonrtbaii- Baiiil ilnllnrtt -, ycA, 8ir. Mr. .loas e. OlLLOK. I think it waa $2,500,4100 on 106 uifles. A, Yes, sir. Q. And tbe stock was 94,000,000 T— A. Yes, sir. Q- Abont 93,000,000 of tbis wkh in tbe Kansas Pacific trastT-~i\. Tes, sir. Q. Ami the bonds were in it t— A. Yes, «ir. Q. Hoth I he bonds and the Htodt I — A. Yes, sit. Q. And there was a million of ontside stock f — A. Yes, sir. Q. Familiar as joii arc « irii that road, what intniisic vaJne bad llii» stoi^k. subject to tb.-it mortgage I — A. Not any. Q. Tbe mortgage was iu default I 8iii>[Hi«f Ibe trnsteea had fore* closed it, what would have l»epn the enr»H:t on tXw mock f^A. To wiw Itont. Q. To cot it off t]ttM-l.T t— A. Y'ea, sir. RErrBiry of bosdhoi-dehs rsiPBovED. Q. Whiit was the enV'CtT Soiuetbing tbat was done in i*ome wftf ioh paired the security of the bondboldcrs under tbe cuusoliilared monRi^a it seems to be thought here. — A. It improved it. Q, Tbis consolidation having bwu m»de>, wbiil t-flV-ct hatl Itou tbe bonds of your trust t — A. It made (bemgniKl; ir gavt> them ikeBnu^ ante*' of tlie consolidated iompany. tj. The question was asked yonby oneof lhe<'ommiK.tiontTs,«li}'ii>e Kansas Pacific^ oi* tbo cousolidaled rompaity, nmld txit jiiMt aa «dl bavt.^ Htrongwl to put the piocoeils of ibis stock iis Jtci'urity for tliecou- sulidatod mortgaj^t? bouds. What buMncKft rcn^ou n ould' there be far such uu arruigemeut as tbat f — A. Not any. Q. Tbis consolidation was made on the bu»is of pntlini* iu tbu Dai- ver l':tcillc, btnngHn asset of the Kansun Pacific, and hartugbeeoliaill nnder thp net of 1801), lo enable the KanKa^ruuitlc to tonm-ctwiilitLt I'uion l'n<-ifi» at Ohc>cnn<\ The consul id a I ton was umile on Ibelnuir tbat tin- l>enver I'acifii- arul the Kansas Pacitic should ^o into tbeuiii' BOlidiition on the b.isis of $M.tHHI.U(K) and Ibc ruiim Pacific Kuitroii() no tlioluislsuf tilwtut 9.1fi,(H>0.(K)0 or 9:w,fMt,0U«. Suppose the** $'i,m,- 000 of stock w liich nei-e in tbn trust bad not been liberated ^la it,iD vbat way cuiiid fbo con-Widailon on that ^aniesnbstantial basis barf been efftvted f— A. Wo could buve called— l hat is jUHt what we ili*- cussed— I ho stock of tho IXiiver P«oitl>;9l or$10or 91(Ht Ici liiewiii' MtldatUin, .just as well us toenll it 94,0(Ml,O0U; and wo disuiuwed,)!] renieiulH«r,'thu putting it iu fir^t in tbut shape; and then, of coiine,«l- dilionnl sliwk was wanted lo carry out these purchases. Fiunllr,EsI uut In inv lo.diH) shares SI that tho company hud the wholoorlt,tlii' Ailldiitioti uas )iiil Ibrongh in thatshniMi. IIul If wo liaduolf^ f Ilii> ciiort we woidd bai'o either fumdosed tbe road or eiN Kuld bHve Ihsmi call^ at a nomiDal price. JAY GOULD. 583 Q. It woald have been short work to have increased, under the laws Df Kansas, the capital stock of the Kansas Pacific to 1 14,000,000, would it not!— A. Yes, sir; certainly. Q. You acquired $1,000,000 of this same Denver Pacific stock? — A. Yes sir. q! Costing you $100,0001— A. Yes, sir. Q. Do you state to this Commission that you sold it to the Kansas Pacific as a part of this transaction at the same price at which you had acquired itt — A. Yes, sir. Q. Although the value imparted to that stock by the consolidation would have been $1,000,000, would it not, or in that neighborhood f — A. Yes, sir. Q. It appears that in October, 1879, a letter was addressed by your- self and others to Messrs. Humphreys and Dodge to consider an equitable basis of consolidation between the Kansas and the Union Pacific Compa- nies. When did they report f — A. They reported in January following. Q. Their report bears date the 16th day of January, 1880. Do you recollect when you first saw it f — ^A. No, sir : I do not think I ever saw it until it came out here in the hearings of this Commission. DID KOT INFLUENCE DODGE AND HUMPHREYS. Q. Did you influence, or attempt to influence in any way, Messrs. Dodge and Humphreys in the making of that report f — A. ITo, sir. Q. I want now to call your attention to this, and ask your judgment respecting the comparative values of the Kansas Pacific, including the Denver Pacific, properties, and the Union Pacific property at the date of the consolidation in January, 1880 1 — A. The Kansas Pacific prop- erties were the most valuable. Q. Will you give your reasons t — A. In the first place, the road [re- ferring to a map] is about 50 miles farther east. It begins farther east. That is, it has 50 miles more of the rich agricultural country. You see, when you get out about here [about 300 miles] you get out of agricult- ural land. To explain that, when you commence at Kansas City and Omaha and go west you gradually climb up. In every mile you pull ap about 15 feet, until you get to Cheyenne, and you are then as high as at the top of Mount Washington ; and Cheyenne is right at the foot of the Rocky Mountains. Q. Give the number of feet of elevation. — A. Over 6,000 feet. When I first went over the Union Pacific they stopped me at Columbus, 100 miles west of Omaha, to show me the line between the agricultural country and the great desert. They said there was nothing west of that. No agricultural products would grow. But I had noticed that the original line was moving west about 20 miles a y*^ar, so that grad- ually it was working up. But this country was then already good agricultural land, so much farther east of it. Then this road [the Kan- sas Pacific] lies about 2,000 feet lower than the Union Pacific, so that it is a better agricultural country all the way up. As the result has shown, the land grant that went with the Kansas Pacific has already netted $150 on the stock, and when it is all closed up it will have netted $200, an asset outside of the road. That is one asset. Out between Chej'enne and Denver, if you go through there, you will find it a per- fect garden. They raise the finest wheat in the country there. The reason is it lies at the base of the Kocky Mountains, where the snow is constantly melting, and they have those streams with which they irri- gate that country. The Union Pacific has nothing of that kind. When U. g. PACiriC RAILWAY COMMISSION. thejr ntrike the monntaiiis here [at Ciieycnnc] it m oat of Ibe reffion «t ■now and wati-r. The refluU in tiist tliey never got over aboat 2S0 niln of agricultural laud fium their land grant. The Kanitafi I'acJficgMi great deal more. Then, again, the Kaunas I'avifii; eoautry wa« filling up. Of tx 1 daw, with my knowledge of tlie Union Pacific, that ttwday ortfanui|k bus Inean, which ha^l been their gohlmi harvetit, was gnuloolly betnj takrii away by other roadn Honlh and north, and 1 saw thai it wanoiilj a question of time when that, Ibu grejtt element on which tite road would lire, wouM disappear, and it wunld have to <.>oniu down (o loal bnxiueM. I Judged theMe proptrtiva by thuir merit*, locally, froui tb« t>e«t light I could gut. The six or M«ren }-carasiuu« tbia anuilgamBtioo w(M iRodu, on the practical tests, will demuuMtrate whether I was riglt or wrong. There wnKiUiotbor tbiug tliati;ovi-rned me. The terioiual pro|i«nia of the Kalians Pnerlio in Kanww City and Denver a ni perfi^Uv niag- olflccnt. I think them wortti $lVMHI,(HH) in Kanwa* City and •I.IHW.OM) in Oenvcr. The Union Piieititt li;id no mich tr^nninaltt. Then the KaoHnH I'noilic had thene briinohefl. Iliey hiul been niini; their earnitigARnd had built tbi-ne feetlers, and hail kepi the bonds uitl stock. They had strained theniselrea to do It, but they had utanageil to kevp the t(lo4iket and Iiondn of these feedera in tbeir treasury, ami they pa«!*e4l under the truHt that Mr. Sage and 1 repreaeute*). Tlnw feedera are very valuable. Q. You had a statement here of the relative mllKoge of tbOHeraadlf you it with yon to-day?— A. Yew, air. You refer to Uda atalement for It!— A. Yea, sir. : UoLVRn. It iH Exhibit No. I, May 18, 1887. KAKflAH PACIl'lC LAND CtKAKT. The WiTN&SK. 1 Iiave got a atat«n>eDt here of that laud j^aut of tlie Kanaaa Paclflo. Tbe landa wbich have been nold to date amoniiltu 91S,ttfitj,h81.44, letM land aalea canceled, 91,t'^,f)n!).24, leaving net ta\w to dat« 1^ 14,1" t,882.2»,whteh, you we, is alwmt IfiUou tho Htoek. Wlwn the conaolidatt^ uiortgago wan imiui^d there were of acres unmlil, 5,100,01M); bilUrei!eivable,«i,Jl/i,00O,excluiiive of Denver Pacific At prcaent the trunteca have tbe following unaold lando : Foar millioa acres; bills receivable, 84,H59,;C8; caab, ♦800.1MHI. Total, *9,05»,*CS, making the land grant realizu about 4l8,W'U,(HH>. Q. Passing tbf mileage of the compauics, which in tiefom the Com- mission, and tbe land grant, what was the condition and atatusof tbe two eonipauies as reHjiects their bonded indcbledness and the liabilities to the United Htutesf— A. The Union Paciac had a bonded debtof •4S,8S3.85. Dy Commiasioner Littleh : Q. Do IlioHtt figures include tbe subt^idy of the Govcntnientl— !■ Yes, sir. Mr. JnUN F. Dillon. And the unpaid interest! The Witness. Tbe Union Pacific bad ♦3fl,7fi2,4«) of slock, brlut 935,280.51 a mile; and the Denver Paciflc and Kansas Pacific t«KCllter had 7i!) miles, $9,800,350 of stock, or ^VJ/M per mile- By Commiaxiouer Ahdekmon: Those estimates are made on the main line of tuileagv, excluiin |0 braucbes!— A. Ye8,Blr*, that would bring it atill mor«&tron*le ^■jybobi JAY GOULD. 586 0 the Kausas Pacific. That would bring the Kansas Pacific down to kbout $6,000 per mile of stock. By Mr. Dillon : Q. !N^ow, iu the coDSolidatiou they were put in at the par of their •espective stocks f — A. Yes, sir. Q. Is it your judgment that the Kansas Pacific property was put in it an undue valaation in this arrangement? — A. No, sir; it was not. Q. It appears in evidence that at the date of the consolidation, and or some time prior thereto, the Kansas Pacific stock was selling iu the narket at a higher rate than the Union Pacific. Did you, or any one to rour knowledge, have anything to do with making prices for either of hose securities? — A. No, sir; I did not make a transaction in the stock. Q. I will ask you whether you made any transaction in the stock aarket or elsewhere with a view to this consolidation or based upon he fact that it might be accomplished ? — A. Not a share. CONffOLroATION UNANIMOUSLY APPROVED. Q. What was the effect of the consolidation after it was consumated pon the general judgment as to the wisdom of that transaction, as videnced by the prices of the securities of the company? — A. It was Danimonsly approved, and the stocks and bonds all appreciated largely, ud the credit of the company assumed a higher claim. Q. Did you ever hear objection to this consolidation on the part of he company while you were connected with the company's manage- leut ? — A. No, sir. THE EFFECT ON THE GOVERNMENT. Q. We have seen that the stockholders all ratified jt, and everybody onnected with the two companies ratified it; that the price in the narket enhanced in consequence of it, and everybody was satisfied that 1 ail anything to do with it. Looking at it from a standpoint of the xovernment, what have you to say as to the effect of that consolidation >n the security of the Government, which is a secured, creditor on these iroperties ?— A. Whatever improves the other bondholders of course ffi proves the position of the Government, for they are bondholders or, ather, mortgage-holders, Q. Did it improve the situation ? — A. It puts a stronger corporation )ehind the Government debt than there was before, because this debt is ihead of the stock, and all these assets that were brought iu add to the •eliability of the company and its capability to pay the debt. Q. What is your judgment as a railroad man — it seems so obvious to ne that I hardly like to put the question — as to the effect of these two properties being under one control and management in strengthening joth, rather than to have them in hostile management or in rival con- :rol and interest?— A. Oh, that is self-evident. Q. What had been the relations of the Union Pacific and the Kansas Pacific prior to the consolidation ? — A. At first they were at swords' points — they were fighting; finally I began to get an interest there in the Kansas Pacific, and the properties gradually came together. First we made one man president of both of them ; we got a good deal of benefit from that; we saved paying out rebates and constant quarreling, and >ne thing or another. ADVANTAGES OF CONSOLIDATION. . S. PACIFIC RAILWAY COMMISSION. TOw OHAmuAM. Ton had been working under an iigrit'ineut fortffo years prior to the consolidation 1 «'"' 1 WlTNEsa. Yea, sir. What is ib« adrantage of a coDBolidatiou over nu agivement t— oa aaved two sets of ofHcers. Yoii can do more work with yonr _ .. .meot. Yiracan coDceotrate it. Q. Ami jroQ tie the properties up 8o that no change of stock ioterrst can separate them, do yon not I — A. Yes, Hir;. there are a great manj- advaiitagrs that grow oat of the combttiatiou of a number of Hinaller road^ iDto ooe stnmg company. In the hrfit place, it ia a great deal better for the ooantry, becauE« the stronger company can protect and develop it* rood. It can build .1 better road, and can run it better, iinil can ran tialnainorefreqaeutly than BmHllroHdHcun; and that bnildaiip the eonntr)' and draws in |>opnl»lion. I'eojile would rather settle on a stiMis raaid. Van will always find landH selling higher along a strong iiMd thaa aloaga wcakooe. <^ Om 7M aaggnt any |Mlut of view in which, in any c\-i>n1, or i« ■ay «!■■», rfcJB cwwilidilioii could iujurionsly affect the interests of tb« Oinnni— 1 1 — A. ffcssr. Q. 9f p— Ikt KauMS Pacific had not been consolidated ; could it W ilJ, M Jill mij^iwlnl J I iiti iiliij , and was it liable to be used, as iv pnin^MMaif raadsnUteEast T-^A. If 1 had uot bought the KaoaiK Weifc il vaaU ptvbablx bare been through there now, because one «f Oa iMipe batofs roaiu voaUl ha%-e taken it up. It wasonlyaqoeir- dn aCt^e krfKC Oat mwM be done. Ifr fywrV PfT^^T So that (he ttonRtltn of [-onsolidutiotiiaa I lIQde^ mai las. ^» daaUe. It pats this property in the hands of one nitiled ll |VH«n»«aBVcCitioii and the hostile relations which had tt» MfHiCe luadft, and it prevents one from beiBE btaAtrf T«a,«dr; A«? combine their Ntn>nfith. rtnttr iM wiQ aa the Union Pncitlc wus a snbHidiied 1b» fiiiiiiiii Paeifii! was subsidized fords'! miles. nc tc wwff t&e weaker, and it was put into the adun Hiinr*. bow would that hurt the Uorem- tbv Tnmn Piwille stockholder! — A. Yea, sir, aAfRt ihi' (iorenimt-at T— A. Ii would not affect [fen .: .1: -<' .I'hiuitige of having a stroD|er Ki" I >i?— A. Ve«, sir. ttbi .>lOll^•lli(latiarl Mr. Sidney Dillan ....1.^ »Ie)U' tu be the halderor -hiak) were the parties with whom the prelimins- ^lAlloii were arranged, were they nott- ' "" " JAY GOULD. 587 Q. lu tboee preliminaries what interest did you noderstand these gentlemen to represent primarily and principally f — A. I understood they represented the Union Pacific first and all the time. Q. The interest of these gentlemen in the Kansas Pacific was a drop in the bucket^ was it not! — A.. Yes, sir. Q. In making this agreement in regard to the consolidation, yoa understood that they represented the Union Pacific, and did 'it to pro- tect their own interest t — A. Yes, sir. Q. And because they conceived it to be the best for that property!— A. That was their object. CAREFUL NEVER TO VIOLATE TDE LAW. Q. One other thing, and I believe I have done. There is a provision in the act of 1873, and perhaps referred to in the act of 1878, that the company shall thereafter pay no dividends except out of net earnings. Commissioner Littler called your attention to some figures that came from some source, I do not know what. What is your understanding, as a director of the Union Pacific, as to the company ever having vio- lated that pro\ision of law t — A. My under^anding is that we were ex- cee^dingly careful never to violate it. Q. Do you recollect controversies existing between the Government and the company in regard to this matter? — A. Yes, sir. CONCERNING NET EARNINGS. Q. Can you state that briefly f — A. It grew out of the question of what oet earnings were. That was one of the questions. Then there was an- other question in regard to mail compensation. TheGovernment claimed to pay the Union Pacific the same rate, per mile, on mail transportation that they paid to ordinary eastern roads ; whereas their charter pro- vided a different measure, and we charged our accounts up according to our own construction of the law. That is, we charged the Government for mail transportation in accordance with the terms of the contract that we had with the Government. They, on their part, charged it up at vrhat they said they were willing to pay, and that made the difference — the apparent difference. According to the Government, the net earn- ings would be one way, and according to the company's accounts they ^ould be another. That went into a litigation, and finally it was decided in our favor. As soon as the balance was adjusted between the Interior Department and the company we paid the difference. Q. 1 will recall it to you, and these gentlemen will verify what I say. The sixth section of the act of 1862 provides that the company shall at all times transport the mails, troops, munitions of war, supplies, and public stores on the said railroad forthe Government, whenever required to do so, and that the Government shall at all times have the prefer- ence in the use of the same for all the purposes aforesaid, at fair and reasonable rates of compensation, not to exceed the amounts paid by private parties for the same kind of services. Do you recollect a suit decided by the Supreme Court of the United States, in which they held that that was a contract binding on the Government, and which Con- gress had no power to change!-^ A. Yes, sir. Q. After that decision was made, you charged for the mail transpor- tation the same amount that you charged for like services to private parties? — A. Yes, sir. I U. 8. PACIFIC r.AlLWAr COMMISS'ON. Q. Tlip OorL'tTimtut, however, insisted tliat the Union Pacific shonld not be alloweil fur rurrjiug the mail ovor this sparsely settled region, and over the mouutnins, nny more than 'they paid the lowaroailsw the New York roads! — A. Yes, sir. Q. And that was the dispute, was it not! — A. Y'es, sir. Q. Do'jou recollect a dispnte on the subject of new construction ami equipment rehitiug to net earnitgst CommiHsiuuer AKDERSOK. I suggest that all that has been declM by the courts. The Chairman. Yes, we have all that. Mr. John F, Dillon. I only want to get this out. Commiiwioaer Littler, in your absence, asked whether the company had not paid dlvi- dends in violation of the act of Congress, at any time when thej wen under default, under the Thiuninu act. Q, Dt) you recollect whether that question was decided in favor of tli« company !— A. Yes, sir. Q. Do you recollect when the balance was aficerlained by Ihejiiilg- me.nt of the Supreme Court, that the company, before that judgtoent was dry, paid the amouutT — A, Yes, sir. Q. And settled the last dollar of difference between it and tlie (Jtiitdi States ! — A. Yes, sir. Mr. John F.Dillon, TheCommissiou understand asto tbeinterect- you read from some stateineut about accrued interest — that the SupRiM Court had decided that this interest is not due until the priuuipalii due. Commissioner Littler. We understand that. You do not »li8|iutt but what the company will have to pay it if they are able, Mr. John F. Dillon. Of course, that and the principal. WHY HE RETIRED FROM THK TNION I'ACIFIf! RAILROAD. Ify the Ohaiiiman: Q. If the conHolidatioii was such a. good thing, why did you re(i» fromtheUniou Pacific Eailroad CoinpanyT — A. Because I made up mj^ mind that it was better for this property to have a large scattered own- ership. As long as they said — the newspaiiers and everybody— that it was Jay Gould that controlled it, the property seemed to he hftiidi- capped, and I made up my mind it was better to get in a large number of investors, scattered around through the difi'erent Slates — the talk was that they would take care of the projierty — rather than to liaveil said that it was owned by one man. I had formed that resolutiou de- liberately, and whenever I saw a market where I could place the siwt in investors' hands, 1 pursued that policy. That was what governed me. I did not like to be in partnership with the Government. It vas constant turmoil and quarreling, and the moment you took thii! prop- erty and made a dividend, paying which we did by our hard worfi, sort- ing night and day, then the Government came in and began to iittict us. If we had gone to the Government while the property was in th9 rut we could have made any settlement we pleased. That tired me onU I knew the country was large, and there were plenty of chances. T''*' was my motive. Not that I did not think this property was valaaWe- 1 think it is a great and noble t)roperty. But, of course, I canuoHliS" guise from myself the fact that it has to meet here now roads tliatii* being built at modern cost. The Government has allowed roads lob* bailt through this territory, where they are building them at $13,llW» JAY GOULD. 589 ?, with steel I'ails. Yet it comes in and says to the Union Pacific, t was built at a cost per mile of $100,000, *'You must pay par and Test." Ir. John F. Dillon. I would like to ask hira about the policy, 'he Chairman. I was going to ask him that, generally. What is the ire of the Union Pacific, based upon the measurement of railroads! 'he Witness. Of course we cannot tell whatwill happen in the future. J of course we can see what is going on every day. These large roads taking a race west for the Pacific — for Colorado and the Pacific coast, n building, in my small way, about six or eight miles a day, going in that way. 'he Chairman. As a competitor with the Union Pacific? GOULD BUILDING ROADS THROUGH SOUTHERN KANSAS. L. I am building through to Pueblo, I am building roads through ithern Kansas. I have to do it to take care of my own, for all the er fellows are prodding me. There are four or five large companies, building. The Chicago and Bock Island, the Burlington and Quincy, Chicago and Northwestern, the Atchison and Topeka, the Saint Louis I San Francisco. All of them are striving for it. Whenever they find alley there, all go for it. The one that gets there first gets it. * 'he Union Pacific has been handicapped. Of course it could not do [\t 1 would do. 1 have large interests, and I strike out for myself, as rere. I go ahead and do what I think ought to be done, and run the i, I take it myself, if the country does not want it afterwards. The ion Pacific had got to meet that situation. The Government has got 3cond mortgage, and not a first. They have got to make a large con- sion in that mortgage as to both principal and the interest It is folly isk this company now to pay the principal of that debt, if it ever can it. By Commissioner Anderson : J. What is going to become of the stock and the subsequent mort- jes ? — A. Why, when that debt comes due, stock is subsequent to this >t. Commissioner Littler. Mr. Anderson asks what will become of it ? ?he W^itness. 1 cannot say what will become of it. I, According to your judgment, the stock and the subsequent liens valueless unless the Government yields?— A. I should be afraid of t very ranch. cost of BUILDING THE UNION PACIFIC. By the Chairman: }. W^hat effect would the future development of the country have f Li have spoken of it in relation to other roads, both as to population I growth and change of population. — A. The Union Pacific would be right if it was capitalized on a moderate basis ; but when the Union Mfic was built they paid as high as $5 or $10 a piece for ties, and the 1 rails, I think, cost $300 a ton, and men had to take their lives in ir hands t J go out there. You know the Indians were after them. By Commissioner Littler : I. You mean the ties sold for $5 a piece or $10 a piece? — A. 1 think ood many of them did. PACIFIC HAILWAY C05IM18BION. I),V CommiHKiun^r AndebsoN: FQ. a iiicL'el — A. Yf»,Bir. I rciuviubt-r Uie Drill time 1 weot< ^d, 1 aaid to tliu conductor of the passeuRCr traiu, " Yoo aevn •«# nay luiliaiiR out lierv, do,vuu t" And bo lif't«d npliiisliat and litssral;* CUtiie to view ; liu liud liceii Kcultied, Do tjiiid tliiit bi^ camn in iritli bit train one day and Htopped it, and be aud ibo bagt^a^jemaD tboogbt tbrjr would go down and oatcli a few trout, about » i|uartt.>r of a mile aw*j from tbe station, aud they bad just got to tl^bint: wben Ibey beani ■ rustle, and be bioked up aud tbere were fifty of tbeue Sioux on boi-Kliacb, 8woopIuK dnnu iiu tbeui, and one eau^bt biui by tbe hair and aaoOta cangbt tbe haKKaseiuan, and tbey scalped tliem aa tbt*y ran. Tbeluf;- gageuiiin died, but this man lived, ami he in ronuin^ tbe train tfaifn to-day. TUat lllustrateH tbe cost of getting men out to bnild tbinrood. Ttiey bad to take tbeir lives iu tbeir bauds. Tbe Govemmenl bm n- oeived already in advantaires mon> tban tbe aj]vane« it made tothli road. In tbefirHt place, it doobled tbe value of it.s own lands, which it sold off, and then the roaddeveloped tbe country, and tbe very differenoB iu transportation, if you had Ibe figures — [ once bad tbi>m made nti— be- tween what it WHA then coftlingibeCrovrmment tndoits Jodtan fl^htliif and what it coat for the Union I'acitic, was more than this Uovemntiie debt. ConmUstoner LlTlLKR. Have yiw those fignrear It iaaiiiutoroor duly to report on that aobject. CoamiasioDer AicDEBSo:t, I tfainti we have tbem. They ate in tiw report oflSTS. By tbe Cbub3U.5 : Q. tiftve yna loaned moocy at aoy time to tbe Vakm I'ocifle Bsdtrji/ Oonpany with wbid to pay diridaiMUT — A. ?!o, sir; I think not. Q. At no time 1 — A- I do not Kmeiber it tj. Yon woQld remember it if foa had loaned aMmey for ibal piu. |MMe ! — A. Tee, air ; if I bad loaited it far that purpeae I would remeo- Ikerit. Q. Do yoa lemOcct mA a difwtaaw ^— A. Vo,^. woaacT ABwuKSMt rat kamas rAcmc Q. HayiefeayatlmiMwmaaanyaflfceahligatiooaof tbflKan- aaaPwitealiaytiiwbyaJrameit— ^t— A. ladraocedihit mill- tea and a hatfAiAam* aaf IbcbimAaltaaaa a eeaditioa of tbeir cat- ttas ilnto iatanat 4an mm 7 ta C per «nc ^ DUyaamaftaasjaAsadnKaaaa aeeonat of tiie intenai od a^af the ibtciPMiaf ibalLMmi PiadMc?— A. I do not rentember aayotWrit. Q. TeMwcn|aadm«Mm*dMalliaaatMlatM]riir *i«Ml>-A-Ta>.ifc. ik»)>»^« 3te.»«JU. OLIVER W. MINK. 597 Q. Then this book contains other transactions besides those referring 0 the consolidated bonds! — A. Well, this land-grant trust was a part f the consolidated trnst ; it all goes into this book. Q. The proceeds are simply charged to tbe trustees as being so much loney received by themf — A. Yes, sir; these credits show the differ- Dt sources where they come from and whether it is fresh sales or notes r interest or what. A. H. CALBF. The Chairman. There will be no further public sessions this week., The Commission then adjourned to meet at the Equitable Building >6ton| Mass., on Tuesday, May 24, 1887, at 10 a. m. AMOS H. CALEF. 595 CONSOLIDATED BONDS SOLD TO GOULD. Q. Please explain the entry of $2,000,000 at page 12 : what does it mean f — A. There were issued $2,000,000 of the consolidated bonds to pay off the floating debt of a million and a half of dollars of the Kansas Pacific and clean it up. •Q. To whom were those bonds issued f — A. The bonds were sold at 75. Q. To whom were those bonds sold at 75 f — A. To Mr. Jay Gould. Q. Do you know anything about bow that sale came to be made at 75 ; who fixed the terms ! — A. I do not recollect. Q. Are there any entries on page 13, where the transactions differ from the mortgage rates t — A. There are not ; no, sir. Q. Have you any account that would show concisely the precise trans- actions in which any of these bonds were issued to Mr. Gould, in any capacity, so that we can examine it at our pleasure t — A. All Mr. Gould's securities and most all those of the New York parties went in under this first entry. Commissioner Anderson. But there are other items afterwards! The Witness. Only straggling amounts that came in afterwards. A. Then the Commission cannot possibly examine these books this afternoon. I will turn over the pages and simply ask you whether any of the items refer to Mr. Gould's transactions. Is there anything on page 14, where Mr. Gould's name appears, or on page 15! — ^A. No, sir. Q. Is there on pages 10 or 17 ! — ^A. No, sir. Q. Is there on page 18! — A. Yes, sir. Q. Please read the item. — A. Nine hundred and twenty-seven thou- sand dollars consolidated bonds, in payment for 7,616 shares of Union Pacific Central Branch stock, and on account of payment for 10,000 shares of Denver Pacific stock. Q. Issued to Jay Gould !— A. Yes, sir. Q. The little figures in the small column on the left refer to what book ! — ^A. The ledger. That [referring to the ledger] is the Union Pa- cific account. ACCOUNT OF TRUSTEES WITH UNION PACIFIC. Q. At page 63 of the ledger is found the Union Pacific account f — A. It is the account of the trustees with the Union Pacific. Q. And this amount of $927,000 is found charged in this account f — A, They are Union Pacific bonds belonging to the Union Pacific Com- pany. Q. That is to say, they are charged to the Union Pacific! — A. Yes, sir. Q. Are you able to state, from your books, against what considera- tion they were issued to the Union Pacific, if that be the real transac- tion ! — A. I will turn to page 14 of my journal. The Union Pacific bad those bonds. Q. Had what bonds f — A. One million four hundred and thirty -five thousand six hundred and eighty-five dollars of Kansas Pacific consoli- dated bonds, and this payment of $927,000 was a part of those bonds. Q. Why was the Union Pacific entitled to those bonds! — ^A. Because she surrendered to the trustees $333,000 of funding bonds, $395,000 second land-grant bonds. Q. State the rates. — A. The funding bonds at par; second land-grants at 50; $185,000 of Solomon bonds at par; $108)950 income V^^\i<^^^\»^^\