Show TELEGRAPHIC II + r THE CENTRAL PACIFIC Commissioner Frenchs Letter to Leland Stanford President New York 16The following was addressed by Theodore French United States commissioner of railroads to Leland Stanford president of the Central Pacific Railroad Company DEPARTMENT or THE INTERIOR OFFICE or THE COMMISSIONER OF RAILROADS SAN FRANCISCO June 11th Eir The results of my examination of the books and accounts of your company com-pany and also my preent views in regard re-gard to matters bearing upon the even tualrenayment to the United States of both principal and interest of subsidy bonds and questions collateral thereto may not be uninteresting to you at this time First however let me note that many of the conditions which existed during the years immediately subsequent to 1873 no longer interpose to complicate matters Calitornia is gradually emerg ing from its business torpor labor is finding employment and at better bet-ter prices state politics are reaching amore a-more settled condition and the near future is full of promise not only to railroads rail-roads but to producing and other interests inter-ests of the Pacific Slope generally as evidenced by the largely increased business busi-ness of your company during the last eleven months ending May 31st and which I find to be as follows 11 months 11 months 18S1 1880 Increase EarningaS2062552 16097497 4565055 Operating e x penses aDd I I rentals 11611708 9668599 1973109 Surplus earnings earn-ings S90008U 0408893 2591916 And let me further note I am more than ever impressed with the exigency not to say the necessity of the consolidation consolida-tion of your lines with those of the Union Pacific so as to fulfil or carry out the original intention of Congress as set forth in the charter acts such consolidation being the only means to obviate the many serious difficulties present and prospective which will doubtless involve other companies and interests and tend to impede in some measure the prosperity prosper-ity ot the whole country After careful c nsideralion E H Miller jr secretary secre-tary of your company and myself have arrived ai the satisfactory conclusion as to a bisis for prorating husi ness between subsidized and unsubsidized unsub-sidized portions of the railroads operated by your company But while the settlement of 79 was made upon the nearest approximation to that which was believed to be fair and equitable and the settlement of 80 still more so we both recognize the impossibility of fixing any absolutely permanent basis for such settlements owing to changing circumstances circum-stances dud conditions which are liable to occur from time to time By the settlement set-tlement of80 the total amount required from your company under the law will be little over 1000000 of which SOO 000 has been already paid by transportation transporta-tion This sum and a much larger turn probably for 8t can I am satisfied be readily paid by your company without in any way preventing or interfering with the payment of dividends of at least 6 percent per-cent per annum hereafter The uncertainty uncer-tainty which attaches to the ascertainment ascertain-ment of the amount of payment to government gov-ernment annually under the existing law and the vulnerability incident toaDY to-aDY company subject to special legislation legisla-tion by Congress indicate that at an early day all subsidized companies com-panies should negotiate loans sufficient suf-ficient on a basis of present value to discharge their debts to the United States when the same han become due and to place the fund beyond peradventure peradven-ture the amount might be deposited in the treasury of the United States and interest in-terest allowed at such a rate as may be agreed upon Since my last interview with you I have read the lease under which your company is operating the Southern Pacific Pa-cific Railroad The Southern Pacific Company erroneously reported that this lease was terminable when eastern connections con-nections were made Your own company failed to report the terms of the lease at all and no copy had been forwarded tome to-me as requested Now upon reading the lease it appears it his nearly four years yet to run which fact puts an entirely different phaze upon the main question at issue in regard to Southern Pacific that of the probable cancellation of this lease whenever the road should begin a large increase of earnings I have no doubt but that the net increase of the earnings of the Southern Pacific in the next four years will exceed any losses of the past four years its gross earnings for 1880 being nearly 4000000 with considerable con-siderable net earnings being above both operating expenses and rental l so that the lease will eventually result in large gain rather than any loss to your company For thi and other reasons I shall deem it my duty at an early day to communicate com-municate with the attorneygeneral of the United States with a view to the discontinuance dis-continuance of proceedings instituted against your company in the circuit court of the United States for the Southern District of New York Very respectfully THEO FRENCH Commissioner Hon Leland Stanford President Central Cen-tral Pacific Railroad San Francisco Cal |