In answer to Senate resolution of February 5, 1885, various papers on the subject of the settlement of indebtedness of the Union Pacific Railroad Company, according to the "Thurman act." FEBRUARY 12, 1885.—Letters ordered to be printed, and, with the accompanying reports, referred to the Committee on the Judiciary. DEPARTMENT OF THE INTERIOR, SIR: In answer to Senate resolution of the 5th instant, directing me— To inform the Senate what amounts were due to the United States on December 31, 18-2, from the Union Pacific Railroad; also what amounts have become due from that date until December 31, 1884, according to the rule established in a decision lately made in the Court of Claims between the United States and said road; also whether the annual settlement was made February 1, 1885, as provided in the Thurman actI have the honor to inclose herewith copy of report of the Commissioner of Railroads on the subject, under date of the 10th instant; also copy of letter addressed to the Commissioner, on the 7th instant, by the Attorney-General; and copy of letter addressed to me, on the 9th instant, by the President of the Union Pacific Railway Company. Very respectfully, H. M. TELLER, The PRESIDENT OF THE SENATE PRO TEMPORE. Secretary. DEPARTMENT OF JUSTICE, SIR: In further answer to your letter of the 3d instant, I will state that the substance of the decision recently rendered by the Court of Claims in the case of the Union Pacific, was as follows: The principal controversy was the rate to be paid for the transportation of mails. In September, 1876, the company notified the Postmaster-General that from and after February 1, 1876, it would charge express rates for carrying the mails in addition to the fares of employés of the Government and mail agents. The period embraced in the litigation was from February 1, 1876, to December 31, 1882, and the claim of the company for transportation of mails over the Union Pacific proper, or the Union Pacific division was $5,733,291; fares of postal clerks and agents, $605,978.44; total, $6,399,269.44. The amount allowed by the Treasury Department for the same services was $2,767,444.22, and the amount in dispute was $3,571,825.22. The Court of Claims has decided this question in favor of the United States, holding, as a matter of fact, that the amounts allowed by the Treasury Department were (in the language of the act of 1862) fair and reasonable and not in excess of the rates paid by private parties for the same kind of service. A similar claim was made for transportation of mails and mail messengers over the Kansas Pacific, between Kansas City, Mo., and Denver, Colo., from February 1, 1880, to December 31, 1882, but no evidence was adduced to show that the rates allowed by the Government were not fair and reasonable, and at the trial claimant virtually abandoned any claim in excess of the allowances. Another controversy was as to the deductions to be made from the gross earnings to ascertain the net earnings of the Union Pacific proper, under the Thurman act. The United States insisted that certain items, aggregating $2,763,670.64 between July 1, 1878, and December 31, 1882, should not be deducted, for the reason that the outlay was for the betterment and improvement of the plant; and even if the betterment and improvement were necessary to the operation of the road, the line should be distinctly drawn and firmly maintained between operation and repair, on the one hand, and betterments on the other. The company insisted that the expenditures were as necessary to the successful operation of the road as other expenses which were not betterments; that they were actually made from the earnings, and that the improvement of the plant was incidental, and not the purpose of the outlay. The Court of Claims finds as a fact that all the items going to make up the $2,763,670.64 were in good faith paid out of the earnings, and were necessary expenses for operating the road and keeping the same in repair (following substantially the language of section 1 of the act of May 7, 1878), and in a proper condition for the transaction of the current business of the road in a profitable and economical manner. The court held substantially as a matter of law, that the word "necessary," in the act of May 7, 1878, would include items expended by the company in keeping itself ready and able to respond efficiently to the growing demands of an ever-increasing business, and that the company is just as much entitled to deduct them under the act of 1878 as under the act of 1862, which had already been construed by the Supreme Court (99 U. S., 402). Another controversy was as to the construction of section 4 of the act of May 7, 1878. Three views were presented to the court: 1. That the company is required to pay in cash on the 1st of February in each year the difference between the amount earned for Government transportation during the year ending December 31, next preceding, and the 25 per cent. of the net earnings for that year, even if that difference exceeded the sum of $850,000. 2. That the cash payment made on the 1st of February should never exceed $850,000, and might be much less. 3. That under the provisions of the act of 1862, 5 per cent. of the net earnings in any given year is to be paid in cash on the 1st of February succeeding, to be applied to the bond and interest acccount, entirely irrespective of the amount of transportation rendered to the Government, and in addition thereto so much of $850,000 as when added to the 5 per cent. required by the act of 1862, and the Government transportation, would make 15 per cent. of the net earnings. The latter view was adopted by the court, the effect of which is that for a given year the company might be called upon to pay as much more than $850,000 as would equal 5 per cent. of the net earnings, but would never be required to pay in cash more than $850,000, plus said 5 per cent. Another controversy was as to the rate to be charged for transportation over the Omaha bridge. It was contended by the United States that by virtue of the act of February 24, 1871 (16 Stat., 430), and section 3 of the act of July 25, 1866 (14 Stat., 244), no higher charge should be made for the transmission over the same of the mails, the troops and the munitions of war of the United States than the rate per mile paid for their transportation over the railroads or public highways leading to the said bridge. The claimant contended that the act of 1866 had no application, and that so long as Congress did not regulate the rates over the bridge, the company had a right to fix its charges and that rates thus fixed were fair and reasonable and not in excesss of the rates paid by private parties. The Court of Claims held as a fact that the rates fixed by the company were fair and reasonable and as a matter of law that Congress did not intend in the act of 1871 to supersede or modify the provisions in the 6th section of the act of 1862. Another controversy was as to the rate to be charged for transportation of Government passengers from Council Bluffs to Ogden or return. The United States contended that as section 6 of the act of 1862 limited the charges of the company to the amounts paid by private parties for the same kind of service, the company could charge for the transportation of a Government passenger from Council Bluffs to Ogden no more than it received for transporting the same distance a private party who had purchased a through ticket from New York to San Francisco. The court held as a matter of fact that the rates charged by the company were fair and reasonable, and as matter of law, that hauling a local passenger from Council Bluffs to Ogden was not the same kind of service as receiving a through passenger from a connecting road at one end of the line and delivering him to another connecting road at the other end and dividing with the several companies the price paid for transportation from ocean to ocean. Another controversy was as to the ascertainment of the net earnings of the subsidized portion of the Kansas Pacific Railway. The United States contended that the operations of the Kansas Pacific during the year 1879, when it was in the hands of a receiver, are sufficiently detailed to enable the court to ascertain exactly what were the net earnings during that and other years over the non-aided and the aided portions. The court, however, holds as a question of fact that it was not proved what were the exact earnings of the aided and non-aided portions of the road, taken separately, and therefore it is necessary to distribute the earnings of the whole in proportion to the length of each. These, I believe, are all the questions passed upon by the court. As I have already stated, the determination of the amount of the judgment and the entry thereof await computations now in progress at the Treas ury Department. BENJAMIN HARRIS BREWSTER, Very respectfully, Hon. WILLIAM H. ARMSTRONG, Commissioner of Railroads, Interior Department. UNION PACIFIC RAILWAY COMPANY, MY DEAR SIR: My attention has been called in the Congressional Record to an order passed in the Senate on Thursday last, 5th instant, calling upon the Secretary of the Interior, among other things, for information as to "whether the annual settlement was made by the Union Pacific Railway Company February 1, 1885, as provided in the Thurman act." I wish to say, for your information, that there will be no delay on the part of this company in making the settlement referred to. Whenever the Department will specify the sum due in that settlement, a draft for the amount shall be forwarded by the return mail. I remain, very truly, yours, Hon. H. M. TELLER, CHARLES F. ADAMS, JR., President. Secretary of the Interior, Washington, D. C. DEPARTMENT OF THE INTERIOR, OFFICE OF COMMISSIONER OF RAILROADS, Washington, February 10, 1885. SIR: I have the honor to acknowledge the receipt, by reference on the 7th instant, of a resolution of the Senate, dated February 5, as follows: Resolved, That the Secretary of the Interior is directed to inform the Senate what amounts were due the United States on December 31, 1882, from the Union Pacific Railroad. Also, what amounts have become due from that date until December 31, 1884, according to the rule established in a decision lately made in the Court of Claims bebetween the United States and said road. Also, whether the annual settlement was made February 1, 1885, as provided in the Thurman act. The amount found to be due from the Union Pacific Railway Company to the United States, on December 31, 1882, was $1,727,742.54, made up as follows: For the six months ending December 31, 1878 (for details see report of this office for 1881, p. 14). $422, 779 31 For the year ending December 31, 1880 (for details see report of this office for 1881, p. 16) For the year ending December 31, 1879 (for details see report of this office for 1881, p. 14) 524,038 38 For the year ending December 31, 1882 (for details see report of this office for 1883, p. 29)... Total. For the year ending December 31, 1881 (for details see report of this office for 1882, p. 34). 721,993 08 663, 345 33 892, 602 17 3,224, 758 27 Less: Balance due the company June 30, 1878 (for details see report of this office for 1881, p. 13). . $491, 244 34 Balance due Kansas division December 31, 1879 (for details see report of this office for 1881, p. 17) Balance due Kansas division for 1880 (for details see report of this office for 1881, p. 17) Balance due Kansas division for 1881 (for details see report of this office for 1882, p. 34) Balance due Kansas division for 1882 (for details see report of this office for 1883, p. 30) . Total 767, 136 30 98,784 41 73, 154 02 66,696 66 1,497, 015 73 Balance due United States 1,727,742 54 |