the process they gradually completed the road, which was opened in 1869, inducing the Government to waive its first mortgage rights so that they could issue nine series of first mortgage bonds to the total amount of $26.9 millions. With their $195,900 as a nucleus, these enterprising men succeeded in creating a total capitalisation of $139,000,000, most of which of course is water; the Pacific Railway Commission, which took a sanguine view, asserts in its report to Congress that the actual cost of the C. P. was but $58,000,000, and of the U. P. $50,720,000. In the construction of the road all the disreputable practices at that time in vogue were resorted to, and the men who were in it' laid the foundation of fortunes which now rank among the largest of the world; for naturally no small proportion of the 'water' went into the pockets of the constructors, who made themselves a present of nearly the entire share capital and, as will be seen below, displayed great skill in getting rid of these shares at a very good price. 6 Soon after its incorporation the company amalgamated with the Western Pacific, which was chartered one year later than the Central Pacific, namely in 1862; and in 1870 it absorbed the Oregon and California, the San Francisco, Oakland and Alameda, and the San Joaquin Valley Railroads, the total length of all lines being then 1,215 miles. In addition to these it leased the Southern Pacific of California, the Southern Pacific of Arizona, the Southern Pacific of New Mexico, and several smaller systems controlled by the old clique and having an aggregate length of 1,229 miles. Thus the Central Pacific obtained a system of 2,444 miles, comprising the greater part of that which to-day is the Southern Pacific of California, and gained control of all lines in California as well as of the second transcontinental route; this last had in the meantime been formed by the Southern Pacific lines running from El Paso (where connection was made with the Atchison) to the Joaquin Valley RR. of the Central Pacific which again led to San Francisco. It was this original Southern Pacific which under Mr. Huntingdon's régime obtained control of the Atlantic and Pacific to prevent the completion of that line to San Francisco (see p. 581). 1 In 1884, however, the Southern Pacific Company was founded, and Huntingdon and Stanford being absolute masters of the situation they had no difficulty in rescinding the leases to the C. P. and in leasing that line to their company. From 1873 until 1883 the Central Pacific had been doing extremely well, as is shown by the subjoined table; and heavy dividends, which facilitated the sale of the common stock at high prices (usually above 80 p.c. of its face value) had been paid. By an ingenious device the sale of this stock by no means terminated the control of the 'bosses.' The stock is registered in the names of former clerks of Huntingdon, Stanford, etc., who endorsed it in blank; dividend coupons are attached, but the owners. cannot exercise their voting rights as it is impossible for them to have the shares registered in their own names. As soon as the C. P. had been leased to the S. P. Co. (1885) its prosperity waned. There is an abundance of presumptive evidence that it was the principal aim of the controlling clique to bring about this change and to transfer the dividends rightly belonging to C. P. shareholders to their own pockets, or, which is the same thing, to those of the S. P. Company. In 1885, 1886 and 1887 the Central Pacific earned no dividends, but since January, 1888, a new lease contract has been in force which secures to Central Pacific shareholders who paid for their certificates at some 85 p.c the splendid annual return of 2 p.c., with a chimerical possibility of more. This new lease stipulates that the C. P. shall retain its own earnings, but that the S. P. Co. guarantees these to be at least sufficient to pay 2 per cent. dividend on its common stock. The share capital amounts to 13 p.c. in 1873, 5 in 1874, 10 in 1875, 8 in 1876 and 1877, nil in 1878 and 1879, 6 from then until 1883, and 3 in 1884. $66,275,500, and a 2 p.c. dividend on it requires a surplus of $1,355,510; and the S. P. Co. having agreed to make up any deficiency below a revenue of $1,360,000 over all charges, a regular dividend of at least 2 p.c. per annum is certain, and if the company earns more this percentage may of course be exceeded.1 This, however, should not lead shareholders to anticipate better returns. Business on the road is no doubt improving, but no matter how great an amelioration may occur, the Southern Pacific will take good care that it does not swell the revenue of the leased company. The S. P. has long since paralleled the best parts of the C. P., and can intercept traffic both from the North and from the South, so that it can regulate the earnings of the Central Pacific to a nicety. Indeed, the falling off of earnings for the current year seems to indicate that this governor has been applied. At present the Central Pacific embraces 1,360 miles of road, the greater part of which, notably the section across the Sierra Nevada and that to Oregon State Line, runs through a mountainous country and could only be built at great expense. The C. P. meets the U. P. at Ogden, runs North of Salt Lake, and crosses the Sierras at an altitude of 8,000 feet above sea level. In the mountains very fine views can be had from the car windows, although the train passes some of the best places in the long snowsheds which had to be constructed to protect the trains from avalanches. The Eastern road traverses the wild country which was the scene of the gold and silver booms; the Northern part is the Shasta Route described on p. 693; the Southern line follows the San Joaquin River, but is devoid of mountain scenery. Subjoined are the customary compilations. 1 As will be seen from the subjoined statements, earnings for 1891 were exceptionally good, and not only was there no necessity to call upon the S. P. to make good its guarantee, but after the 2 p.c. dividend had been paid there remained a surplus of more than $800,000. American Railroads. 45 Assets General Balance Sheet, December 31st, 1891. Construction and equipment.-Amounts standing on the books of the Co. for the construction of railroad and telegraph lines, side tracks, bridges, buildings, shops, machinery, tools, telegraph instruments, furniture, right of way, real estate, wharves, piers, snow sheds and galleries, transfer and ferry steamers, river steamers, barges, locomotives, cars, snow plows, etc... Miscellaneous investments. Land contracts.-Deferred payments on time sales. Total assets. Liabilities 168.963,326 83 1,576,928 97 1,187,802 35 2 894,103 33 174,622,161.50 $ |