[350] Hittell, “Commerce and Industries of the Pacific Coast,” Ch. 11.
[351] United States Pacific Railway Commission, p. 2924, testimony Leland Stanford.
[352] United States v. Union Pacific Railroad, pp. 3316-20.
[353] Message from the President of the United States to the House of Representatives transmitting copies of contracts and leases entered into by the Southern Pacific Company, etc., February 4, 1886. 49th Congress, 1st Session, House Exec. Doc. No. 60, Serial No. 2398.
[354] United States v. Union Pacific, pp. 3321-25.
[355] United States Pacific Railway Commission, pp. 4276-77.
[356] Report on the internal commerce of the United States, by Joseph Nimmo, Jr., Chief of the Bureau of Statistics, Treasury Department, 1884, Serial No. 2295.
[357] Exception should be made of the period between December 16, 1900, and June 11, 1902, when there was no agreement between the Pacific Mail and the Panama Railroad. (United States v. Union Pacific, p. 2911, testimony Conner.)
[358] Bancroft, “Chronicles of the Builders,” Vol. 5. Ch. 6; San Francisco Chronicle, November 10, 1878.
[359] California Mail Bag, August, 1874.
[360] San Francisco Examiner, May 1, 1894. Discrimination was easy because rates were not published. Freight schedules were considered to be for the information of employees and not for general publication.
[361] Report of California Commissioners of Transportation, 1877, table 1, pp. 34-38.
[362] Report of the Senate Committee on Constitutional Amendments, relative to constitutional amendment No. 8, abrogating provisions of constitution as to railroad commission (in appendix to journals of the Senate and Assembly of the Legislature of the State of California, 30th Session, Vol. 8, 1893.)
[363] San Francisco Examiner, October 27, 1893. Even in the case of through rates more than one classification was used. It appeared in a case brought before the Interstate Commerce Commission in 1887 that while the Western classification governed shipments from San Francisco to Denver, another classification, known as the Pacific Coast eastbound classification, was used in connection with freight moving from San Francisco to the Missouri River. (Martin v. Southern Pacific Company, 2 I. C. R. 1 [1888].)
[364] United States Pacific Railway Commission, pp. 2536-37, testimony Leland Stanford.
[365] Report of California Commissioners of Transportation, 1877.
[366] Statement of J. S. Leeds, submitted to the State Railroad Commission (San Francisco Bulletin, April 4, 1892).
[367] United States Pacific Railway Commission, p. 3344, testimony J. C. Stubbs.
[368] Letter of Stanford to Committee of San Francisco Chamber of Commerce, December 1, 1873.
[369] United States Pacific Railway Commission, pp. 3292-93, testimony J. C. Stubbs.
[370] San Francisco Examiner, December 30, 1892, October 29, 1894; San Francisco Bulletin, January 31, 1893.
[371] San Francisco Examiner, October 30, 1894.
[372] United States Pacific Railway Commission, pp. 3299, 3300, testimony J. C. Stubbs.
[373] Railroad Commission of Nevada v. Southern Pacific Company, 21, I. C. C. R. 329, 349 (1911).
[374] A copy of this contract is printed in the San Francisco Chronicle of May 7, 1879.
[375] San Francisco Call, August 1, 1878.
[376] Report of the Committee on Corporations of the Assembly of California, 1883, sup. cit. See also testimony taken before the Senate Judiciary Committee of the legislature of California in considering Assembly Bill No. 10 concerning the Regulation of Railroads, 1884 (in Appendix to the journals of the Senate and Assembly of the Legislature of the State of California, 25th Session, Extra).
[377] Railroad Commission of Nevada v. Southern Pacific Company, 21 I. C. C. R. 329, 346 (1911).
[378] Letter written by John T. Doyle and printed in the Nation, December 8, 1881.
[379] United States Pacific Railway Commission, pp. 3333-34, 3358-59, testimony J. C. Stubbs.
[380] The special contract system had the bad effect of repressing complaints from shippers. Mr. Overheiser, member of the State Grange, farmer, and resident of California since 1849, testified in 1884 before a committee of the California Senate as follows:
“Q. Are you sufficiently acquainted with the commercial community of Stockton to know whether they have any reluctance in making complaint ... before any Court of justice, or in going before the Railroad Commissioners, or an investigating committee? A. All I know about it is the impressions I have drawn from what I have heard.
“Q. To what effect? A. I would be very reluctant to come before this body and state what firm I belong to, or represent, for fear that the railroad might chastise me for it, or my firm.
“Q. Is that opinion generally shared among the merchants? A. As I understand it, that is the general opinion.
“Q. What do you mean by the word ‘chastise’? A. They might take our contracts away from us.”
This testimony was corroborated by at least one well-established merchant in San Francisco, who declared before the same Senate committee that business men in San Francisco were afraid to testify against the railroad for fear that their contracts might be broken. (Testimony before the Senate Judiciary Committee of the Legislature on Assembly Bill No. 10, 1884.)
[381] Business Men’s League of St. Louis v. Atchison, Topeka and Santa Fé Railroad, 9 I. C. C. R. 318 (1902). The number of vessels with their tonnage which entered the port of San Francisco in the trade with the Atlantic ports of the United States by way of Cape Horn from 1867 to 1884 was as follows:
| Year ended June 30 | Number | Tonnage |
| 1867 | 103 | 110,721 |
| 1868 | 119 | 124,504 |
| 1869 | 139 | 153,784 |
| 1870 | 111 | 126,726 |
| 1871 | 53 | 66,289 |
| 1872 | 63 | 70,956 |
| 1873 | 87 | 104,586 |
| 1874 | 62 | 83,248 |
| 1875 | 75 | 110,071 |
| 1876 | 88 | 124,793 |
| 1877 | 86 | 124,746 |
| 1878 | 68 | 104,544 |
| 1879 | 57 | 92,683 |
| 1880 | 53 | 86,332 |
| 1881 | 55 | 89,097 |
| 1882 | 67 | 104,157 |
| 1883 | 71 | 118,494 |
| 1884 | 48 | 84,196 |
[382] Proceedings of the Transcontinental Association, 1885. The special contract system was strikingly similar to the system of “deferred rebates,” until recently in good repute among ocean steamship companies. The argument in defense of this last-named system shows how slowly an understanding of the advantages of equality in matters of transportation rates spreads in a community. It is the view of the writer that both the special contract and the deferred rebate systems were and are contrary, to sound public policy, whether applied on land or sea.
[383] A miner in Shasta County wrote to the San Francisco Examiner in 1893:
“I will state some facts about the attempt that was made to ship ores from here. Up to 1887 little or no assorted gold ores had been shipped. It was so new an enterprise that it was not classified in freight rates of the railroad company. The company was asked to establish rates, which it did—at $50 per car from Redding to San Francisco. This was satisfactory to the miners. We commenced to ship, and in a few months were sending down over 100 tons per month and had hopes of building up a permanent business. All at once, without notice, the freight was increased to $73 per car, and in a short time it was again raised, this time to $95 per car, and lots of less than one car were raised from 48 cents to 76 cents per 100 pounds. I went to San Francisco to see why this was done, and after considerable trouble gained an audience with an official at Fourth and Townsend streets. I spoke to the official about the advance on ore freight rates. His reply was: ‘Why, you are sending down ore that would make a prince rich. We can’t pull high-grade ore on low-grade rates.’ I reminded him that it was billed at a valuation of $100 per ton and that the railroad company’s responsibility ended there, and that we wished rates on all grades of ore, as there were so many values we could not classify them.
“Then he made me the proposition that there be no regular rates established, but to ship to the smelter for one month and then bring my returns and he would take out what he might think a recompense for pulling these values over the road. For cheek as a business proposition I think this stands pre-eminent. Of course it was rejected, and I was given rates as follows: Anderson, $71; Redding, $73 per car.” (San Francisco Examiner, May 8, 1893.)
[384] United States Pacific Railway Commission, pp. 3319-20, testimony J. C. Stubbs.
[385] Proceedings of the Transcontinental Railway Association, 1885, pp. 17-18.
[386] Letter to the State Railroad Commission, February 20, 1883.
[387] San Francisco Chronicle, August 25, 1879. It appears that the fare from San Francisco to Sacramento by steamer had been $5 in pre-railroad days. When the California Pacific commenced operations in 1869, the fare fell to $4, and when the Western Pacific was opened, a $3 rate was put in. As far back as the fifties, rates were still higher. (A. A. Cohen, Letter to the State Railroad Commission, 1883.)
[388] Opinions and Orders of the Railroad Commission of California, 1916, Vol. 10, p. 354 ff.
[389] Declaration of Principles of the Anti-Monopoly Party of Tulare County (Mussell Slough Delta, February 24, 1882).
[390] San Francisco Chronicle, August 27, 1879.
[391] Stockton Independent, March 10, 1876.
[392] San Bernardino Board of Trade v. Atchison, Topeka and Santa Fé Railroad Company, 3 I. C. C. R. 138 (1890). The Circuit Court for the Southern District of California refused to enforce the decree of the Interstate Commerce Commission in this case. (Interstate Commerce Commission v. Atchison, Topeka, and Santa Fé Railroad Company, 50 Fed. 295 [1892].)
[393] Harbor City Wholesale Company of San Pedro, California, v. Southern Pacific Company, 19 I. C. C. R. 323 (1910).
[394] Commercial Club of Santa Barbara, California, v. Southern Pacific Company, 12 I. C. C. R. 495 (1907).
[395] Santa Rosa Traffic Association v. Southern Pacific Company, 24 I. C. C. R. 46 (1912); 29 I. C. C. R. 65 (1914); Transcontinental Commodity Rate to San José, Santa Clara and Marysville, California, 32 I. C. C. R. 449 (1914).
[396] In 1887 a steamer of the Pacific Coast Steamship Company left San Francisco weekly for Vancouver, where its freight was loaded upon cars of the Canadian Pacific Company and taken east across the mountains. The Canadian Pacific demanded, and in 1888 was conceded, the privilege of accepting freight from San Francisco to Chicago and points east at rates less than those charged by the other transcontinental lines. (Martin v. Southern Pacific Company, I. C. C. R. 1 [1888].)
[397] Business Men’s League of St. Louis v. Atchison, Topeka and Santa Fé Railway Company, 9 I. C. C. R. 318 (1902).
When the Interstate Commerce Act was passed in 1887 the transcontinental carriers agreed to grade eastbound rates back to the Pacific Coast. Under tariffs issued April 5, 1887, Missouri River rates were applied for about 350 miles west of the river, from which point they gradually decreased to Denver. The Denver rates were applied from Denver to a point near Green River, over 300 miles west from Cheyenne. From Green River the rates again decreased gradually to the Pacific Coast. The tariff of April 5 was published in order to comply with Section 4 of the Interstate Commerce Law, and it was superseded by other tariffs in April and May, 1887, by permission of the Interstate Commerce Commission. (Martin v. Southern Pacific Company, 2 I. C. C. R. I [1888].)
In later years transcontinental rates to interior points were not uniformly built by combination upon the terminals. In many cases, even in westbound rates, the terminal rates served as maxima beyond which intermediate rates were higher than to terminal points, but not by the full extent of the local back. Thus on the Central Pacific in 1902 the company named class rates to intermediate points which acted as maxima to all points, which meant that when the specified intermediate rate was less than the terminal plus the local back, the lower rate prevailed. Nor must the influence of the Interstate Commerce Commission in reducing intermediate rates be left out of account. Yet it was the conclusion of this same commission as late as 1902, that the point where the direct rate from the East was at least as high as the sum of the terminal rate and the local rate from terminal to intermediate destination, was on the average 300 miles east of the Pacific Coast, and in some instances several times that distance, a fact which is sufficient to characterize the system as a whole.
[398] Business Men’s League of St. Louis v. Atchison, Topeka and Santa Fé Railway Company, 9 I. C. C. R. 318 (1902). See also Rates on Asphaltum, etc., 33 I. C. C. R. 480 (1915).
[399] In so far as there is rail competition between transcontinental carriers, this rivalry also is keenest upon the Pacific Coast, and weakest in the intermediate territory.
[400] Report of Senate Judiciary Committee on Assembly Bill No. 10, 1884, testimony C. S. Stevens.
[401] Letter of Stanford to a committee of the San Francisco Chamber of Commerce, 1873.
[402] Railroad Commission of Nevada v. Southern Pacific Company, 19 I.C.C.R. 238 (1910).
[403] San Francisco Bulletin, March 26, 1892.
[404] Ibid., October 12, 1892.
[405] Huntington manuscript, pp. 27-28.
[406] Hearings before the Committee on Interstate and Foreign Commerce of the House of Representatives on H. R. 9928 (55th Congress, 2d Session, March 26 to April 2, 1918, pp. 84-85, testimony W. S. McCarthy).
[407] Hearings before House Committee on Interstate and Foreign Commerce, sup. cit., pp. 170-71, testimony, L. J. Spence.
[408] Business Men’s League of St. Louis v. Atchison, Topeka and Santa Fé, sup. cit.
[409] Kindel v. Atchison, Topeka and Santa Fé Railway. 8 I. C. C. R. 608 (1900). In its first exercise of authority under the amended long-and short-haul clause, the Interstate Commerce Commission of 1911 prescribed the extent to which rates from eastern points of origin at and west of the Atlantic seaboard to Reno and other points upon the main line of the Central Pacific might exceed the rates to Pacific Coast terminals. (Railroad Commission of Nevada v. Southern Pacific. 21 I. C. C. R. 329 [1911].) Cf. Commodity Rates to Pacific Coast Terminals, 32 I. C. C. R. 611 (1915).
[410] Railroad Commission of Nevada v. Southern Pacific Company, 19 I.C.C.R. 238 (1910).
[411] Commodity Rates to Pacific Coast Terminals, 32 I. C. C. R. 611; 34 I. C. C. R. 13 (1915).
[412] Daggett, “The Panama Canal and Transcontinental Rates,” (in Journal of Political Economy, December, 1915); Rates on Asphaltum, etc., sup. cit.
[413] Reopening Fourth Section Applications, 40 I. C. C. R. 35 (1916); Transcontinental Rates, 46 I. C. C. R. 236 (1917). See also Skinner and Eddy Corporation v. United States, 39 Supreme Court Report 375 (1919).
[414] Wheeler, “The Valley Road—A History of the Traffic Association of California, the League of Progress, the North American Navigation Company, the Merchants’ Shipping Association, and the San Francisco and San Joaquin Valley Railway” (San Francisco, 1896). See also Walker, “Pioneers of Prosperity” (San Francisco, 1895).
[415] United States v. 250 Kegs of Nails, 52 Fed. 231 (1892); 61 Fed. 410 (1894). See also San Francisco Bulletin, November 19, 1891.
[416] 27 United States Statutes 455 (1893). This bill was introduced by Senator Frye.
[417] Proceedings of the Merchants’ Convention (San Francisco Bulletin, October 19, 1891).
[418] The constitution of the Traffic Association is printed in full in the San Francisco Bulletin, November 4, 1891.
[419] San Francisco Bulletin, October 17, 1891.
[420] San Francisco Examiner, October 8, 1891.
[421] San Francisco Bulletin, October 17, 19, 1891; San Francisco Chronicle, October 18, 1891.
[422] San Francisco Chronicle, October 24, 1891.
[423] San Francisco Bulletin, November 4, 1891.
[424] It was the position of the executive committee of the Traffic Association, and in this they were supported by the traffic expert whom they employed, that it would be exceedingly bad policy for San Francisco to antagonize the interior by endeavoring to secure special advantages for itself. (San Francisco Chronicle, December 10, 1892.)
The Traffic Association was said to be, under its constitution and by-laws, a state institution, organized to promote the welfare of the whole state. The executive committee did not believe that San Francisco should be made the sole terminal even were this possible. The city would assume its proper and legitimate place not as the oppressor, but as the protector of every industry in the state, provided free competition and equally adjusted local rates could be secured. (Ibid., December 18, 1892.)
[425] San Francisco Chronicle, November 3, 1892.
[426] Ibid., December 7, 1892. The reply of the executive committee of the Traffic Association to this address is printed in the San Francisco Examiner, December 18, 1892.
[427] Sacramento Union, April 4, 1892.
[428] Ibid., May 13, 1892. San Francisco merchants declared that it was cheaper to send nails from San Francisco to Bakersfield via Los Angeles, water and rail, than to move them direct by rail over the floor of the San Joaquin Valley.
[429] San Francisco Bulletin, November 23, 1891. Mr. Leeds was given a two-year appointment, at a salary of $12,000 per annum.
[430] Walker, “Pioneers of Prosperity,” sup. cit., p. 46.
[431] The Merchants’ Shipping Association continued in active operation until January 1, 1894, when Grace and Company agreed to carry on the business on their own account. The first boat to arrive in San Francisco was the “Charles E. Moody,” of 1,915 tons. The next two were the “T. F. Oakes,” of 1,897 tons, and the “Emily Reed,” of 1,488 tons. Subsequently, still other vessels were added.
[432] San Francisco Bulletin, June 24, 1892.
[433] San Francisco Chronicle, August 6, 1892.
[434] San Francisco Bulletin, August 4, 1892.
[435] San Francisco Examiner, August 18, 1892.
[436] San Francisco Bulletin, January 5, 1893.
[437] Walker, “Pioneers of Prosperity,” sup. cit., p. 173.
[438] San Francisco Bulletin, August 31, 1892.
[439] San Francisco Examiner, January 9, 1894. Cf. statement by General John Newton, president Panama Railroad Company, ibid., November 29, 1892.
[440] Wheeler, “The Valley Road,” sup. cit.
[441] Wheeler, “The Valley Road,” sup. cit.
[442] San Francisco Examiner, January 21, 1893.
[443] San Francisco Examiner, February 28, March 5, 1893.
[444] Ibid., December 20, 28, 30, 31, 1893, and January 3, 1894.
[445] San Francisco Examiner, April 1, 1893.
[446] San Francisco Examiner, March 19, 1893.
[447] Wheeler, “The Valley Road,” sup. cit., pp. 32-33.
[448] San Francisco Examiner, January 10, 1894.
[449] San Francisco Examiner, September 21, 1893, statement by H. E. Huntington.
[450] Ibid., April 25, 1893, statement by Agent Hinton of the Panama Railroad.
[451] Business Men’s League of St. Louis v. Atchison, Topeka and Santa Fé Railroad Company, 9 I.C.C.R. 318 (1902).
[452] San Francisco Examiner, February 4, 1892.
[453] San Francisco Bulletin, August 20, 23, 1892. The League of Progress was an organization composed of the younger business men in San Francisco in sympathy with the policies of the Traffic Association.
[454] San Francisco Bulletin, October 12, 1892.
[455] San Francisco Examiner, December 23, 1892.
[456] Ibid., March 8, 1893. See also ibid., March 4, 1893. With respect to the whole project Mr. Huntington said to a reporter:
“As to building a railroad to Salt Lake, I certainly have no objection to other people doing it. I should very much dislike to do it myself. I do not believe it would be for the interest of San Francisco merchants to build it; hence I do not think it will be built. A good railroad from San Francisco to Salt Lake, with good terminals, as good a road as the Central Pacific, would cost at least $50,000,000. Of course, a road can be built for a much less sum, but such a road would not compete with the present line, for certainly the present rates are not as much as it would cost to haul the tonnage over a cheap line that could be built for much, if any, less than the figure named. When the Central Pacific Railroad was built I urged the moneyed men of San Francisco to take an interest with us on exactly the same basis as I and my associates hold our interests. But no one here would take an interest. If they would not take an interest then when every man, woman, and child in the State wanted a road so that they could go East and see the old folks at home, they would hardly be likely to take it now, with at least seven lines across the continent, charging rates of fare and freight very, very much less than they were when the first road was built, or than they expected these rates would be when the first road was inaugurated.” (Ibid., September 20, 1892.)
[457] San Francisco Bulletin, June 22, 1893.
[458] Ibid., July 17, 1893.
[459] San Francisco Bulletin, July 18, 1893.
[460] Ibid., July 10, 1893. The stock was to be issued in the name of nine trustees, and was to be voted by these gentlemen. The trustees were to have the right to cause the consolidation of the proposed corporation with another company. Possibly the railroad project suffered somewhat from the fact that a plan existed for the construction of a ship canal up the San Joaquin Valley to Bakersfield. Fresno people were particularly interested in this scheme, which contemplated the connection of Fresno with the navigable part of the San Joaquin River at Crowe’s Landing, or some other convenient point. (San Francisco Examiner, June 3, June 5, 1894.)
[461] San Francisco Bulletin, September 27, 1894.
[462] San Francisco Examiner, January 18, 1895.
[463] San Francisco Examiner, February 9, 1895.
[464] Ibid., January 30, 1895.
[465] Statement of J. S. Leeds in the San Francisco Bulletin, October 1, 1894, and in the San Francisco Examiner, January 27, 1895.
[466] San Francisco Examiner, March 6, 1895.
[467] San Francisco Examiner, January 31, 1895. As a matter of fact, the bulk of the subscriptions came from a very few sources.
[468] San Francisco Bulletin, March 1, 1895.
[469] San Francisco Examiner, April 27, 1895.
[470] The question as to what the valley towns would do for the new enterprise was repeatedly asked, and received a reasonably satisfactory reply. Depot sites and rights-of-way were freely offered, and subscriptions to stock were talked about, if not often pledged in any binding way. The Spreckels group tried to encourage donations of all lands, and to play one town against another where this was possible. It refused to say, for example, whether the new road would begin at Stockton, as once proposed, or even whether the new route would not run through San José. Stockton organized a committee to present her claims. San José did the same. Mass meetings were held in both places, that in San José being marked by a procession, with transparencies and a band. Stockton merchants agreed to give to the San Francisco and San Joaquin Valley Railway rights-of-way 100 feet wide along the adopted survey for the railroad from the city of Stockton through San Joaquin County to the boundary line between San Joaquin and Stanislaus counties. They further agreed to convey to the railway company certain specified parcels of land in the city of Stockton, to aid the company in obtaining franchises and rights-of-way in Stockton, and to obtain subscriptions to the capital stock of the company to the amount of $100,000. (San Francisco Examiner, May 3, 1895.)
The San José delegation which came to San Francisco in March said that $148,000 had already been secured for the new road in their district, that $200,000 was in sight, and that $300,000 in subscriptions could be obtained with a guaranty of shipments by the new route from the large fruit packers, business men, farmers, and horticulturists. They added that rights-of-way, 75 per cent of which would be free of cost to the company, and also terminal facilities in San José would be provided. (Ibid., March 27, 1895.)
It is of some interest to recall that when the decision was made in favor of Stockton, her representatives had difficulty in making their promises good. It was remarked at one time that apparently one of the things most needed to help on the era of progress in California was a number of judiciously selected funerals—presumably of opponents to the new developments.
[471] See address of Robert Watt at Bakersfield, San Francisco Examiner, April 29, 1895.
[472] San Francisco Examiner, January 30, 1895.
[473] Letter from the Spreckels’ Committee to San Francisco Bankers, San Francisco Examiner, February 3, 1895.
[474] San Francisco Examiner, March 26, 1895.
[475] Ibid., April 6, 1895.
[476] San Francisco Bulletin, April 6, 1895.
[477] Laws of California, 1878, Ch. 219.
[478] San Francisco Examiner, March 9, 1895.
[479] Ibid., March 11. 1895.
[480] This was the proposal of Mr. Powers, of San Francisco. See Journal of the Assembly, 31st Session, March 8, 1895, p. 904.
[481] Reid amendment, Journal of the Assembly, 31st Session, March 11, pp. 961-62.
[482] Laws of California, 1895, Ch. 171.
[483] Indenture dated July 8, 1895. The lease was to expire May 1, 1945. Five years after the lease was signed, however, the State Harbor Commission declared it terminated because of the failure of the railway company to make agreed improvements. A new indenture was then signed by the parties under date of November 21, 1900. By this document the state slightly increased the area leased to the railway company, and extended the term to December 1, 1950. For its part, the railway agreed to construct a definite length of sea-wall along the front of the leased property, and to spend $50,000 annually for six years on improvements. It is interesting to observe that while the new lease, like the old, was non-assignable, the restriction in the indenture of 1900 did not apply to any assignment or transfer that might occur at the expiration of the Valley company’s corporate life through foreclosure of its bonded indebtedness, nor to any sale, transfer, or assignment to the Atchison, Topeka and Santa Fé Railway Company. The Santa Fé road, successor to the San Francisco and San Joaquin Valley Railway, purchased additional property adjacent to and south of China Basin, but its terminals are still on the land leased from the state. This includes the company’s freight ferry lands, its freight houses, and most of its yard tracks in San Francisco. See on this matter the annual reports of the Atchison, Topeka and Santa Fé Railroad, and also the San Francisco Examiner, November 15, 1898.
[484] San Francisco Examiner, October 27, 1898. Another point of view with respect to the consolidation of the San Francisco and San Joaquin Valley Railway with the Santa Fé is presented by W. B. Storey, chief engineer and general superintendent of the Valley line from 1895 to 1900 and now president of the Santa Fé. Mr. Storey writes:
“My views do not coincide with yours in regard to the reasons actuating the promoters of the railroad. Popular opinion in California believed that the domination of one railroad greatly retarded the progress of the state and it was the feeling that the prosperity of the state would be very greatly increased if competition could be provided. As a possible means of obtaining such competition resort was made to water competition and a steamship line was organized to handle freight via the Isthmus. This line was maintained until the money raised had been absorbed and it had been practically demonstrated that such a line could not pay. The public was, therefore, eager for any other competition that might present itself. It was the thought of the projectors that a local line should be built which might ultimately, if opportunity offered, become part of a transcontinental line. The Santa Fé, however, was not in a position to do anything, as it was at that time in a Receiver’s hands. It was, however, the nearest railroad and it, therefore, seemed wise in projecting a new road branching from San Francisco to so locate it that it could later become part of the Santa Fé if that road desired an entrance to San Francisco. Most of the people who subscribed did so with the idea of providing competition and not with the idea of making money out of the investment.... By the time the road reached Bakersfield it became evident to the Directors that the road could not successfully compete with the Southern Pacific, because while for the time the people in the valley were giving the road all the freight that came from San Francisco, they were not able to turn the freight coming from the east over the Valley Road, the Southern Pacific refusing to make joint rates. The consequence was that the Valley Road had to depend exclusively on local business, and it was felt that in time even this would drop off materially by reason of the competitive methods of the Southern Pacific. Mr. Spreckels expressed the case in the following manner: It was not possible for the Valley Road to exist unless it became a transcontinental road and California could not raise money enough to make it such. The Santa Fé, by an extension to Bakersfield, could make it a transcontinental road and offered to buy a controlling interest.”
[485] See especially a letter written by John T. Doyle under date of September 29, 1898, and published in the San Francisco Bulletin, October 5, 1898. The whole matter was extensively discussed in the columns of the San Francisco press in October, 1898.
[486] San Francisco Examiner, October 27, 1898.
[487] Biennial Report of the Board of Railroad Commissioners of the State of California for the years 1895 and 1896.
[488] San Francisco Examiner, September 19, 1896.
[489] Ibid., June 28, 1898.
[490] San Francisco Examiner, August 23, 1896.
[491] Ibid., June 4, 1898.
[492] Ibid., July 18, 1896.
[493] Ibid., September 15, 1897.
[494] Ibid., June 4, 1898.
[495] In order to make possible its low San Francisco rate, the San Francisco and San Joaquin Valley Railway concluded an arrangement with the California Navigation and Improvement Company by which the latter agreed to run two steamers a day each way between Stockton and San Francisco, and to handle all wheat shipments to Port Costa, Benicia, Vallejo, and San Francisco which were delivered to it by the Valley road. The same rate was to be charged from Stockton to all the points named. (San Francisco Examiner, July 9, 1896.)
[496] Ibid., August 23, 1896.
[497] The relations between the Southern Pacific Company and the proprietary companies were governed by what was known as the “omnibus” lease, under which the Southern Pacific agreed to operate and to maintain the properties of the proprietary companies, to pay all fixed and other charges, including interest on bonds and floating debt, and to divide the surplus net profits between the parties to the agreement in stipulated proportions. In 1896 the percentages for division of profits were as follows: Southern Pacific Railroad of California, 44 per cent; Southern Pacific Railroad of Arizona, 10 per cent; Southern Pacific Railroad of New Mexico, 6 per cent; Louisiana Western Railroad Company, 7 per cent; Morgan’s Louisiana and Texas Railroad Company, 23 per cent; Southern Pacific Company, 10 per cent.
[498] In later years the lumber business of the Southern Pacific developed, but the coal business has always remained small.
[499] Cf. Annual Report of United States Commissioner of Railroads, 1883-84.
[500] Report on the Internal Commerce of the United States (Treasury Department, 1884), sup. cit.
[501] United States v. Southern Pacific, p. 155, testimony of Schumacher; p. 942, testimony of Chambers; pp. 1028-29. testimony of Spence.
[502] San Francisco Examiner, October 24, 1895.
[503] San Francisco Examiner, February 25, 1896.
[504] United States v. Southern Pacific, pp. 328, 338, testimony of Connor.
[505] Ibid., p. 199, testimony of Sproule.
[506] Ibid., p. 1034, testimony of Spence.
[507] Ibid., p. 290, testimony of Lovett.
[508] Ibid., p. 305, testimony of De Friest; p. 311, testimony of Johnson; p. 312, testimony of Hall.
[509] Ibid., p. 219, testimony of Sproule; p. 152, testimony of Schumacher; p. 827, testimony of Kruttschnitt.
[510] United States Pacific Railway Commission, p. 2150, testimony of Shelby.
[511] United States Pacific Railway Commission, pp. 3304-6, 3362, testimony of Stubbs; pp. 3572-73, testimony of Gray.
[512] Frye-Davis Report (51st Congress, 1st Session, February 17, 1890, Senate Report No. 293, Serial No. 2703).
[513] The dividends declared by the Central Pacific Railroad Company from 1861 to 1898 were as follows:
| Year | Month | Per Cent | Amount |
| 1873 | September | 3 | $1,628,265 |
| 1874 | August | 5 | 2,713,775 |
| 1875 | April | 4 | 2,171,020 |
| 1875 | October | 6 | 3,256,530 |
| 1876 | April | 4 | 2,171,020 |
| 1876 | October | 4 | 2,171,020 |
| 1877 | April | 4 | 2,171,020 |
| 1877 | October | 4 | 2,171,020 |
| 1880 | February | 3 | 1,628,265 |
| 1880 | August | 3 | 1,778,265 |
| 1881 | February | 3 | 1,778,265 |
| 1881 | August | 3 | 1,778,265 |
| 1882 | February | 3 | 1,778,265 |
| 1882 | August | 3 | 1,778,265 |
| 1883 | February | 3 | 1,778,265 |
| 1883 | August | 3 | 1,778,265 |
| 1884 | January | 3 | 1,778,265 |
| 1888 | February | 1 | 672,755 |
| 1888 | August | 1 | 672,755 |
| 1889 | February | 1 | 672,755 |
| 1889 | August | 1 | 672,755 |
| 1890 | February | 1 | 672,755 |
| 1890 | August | 1 | 672,755 |
| 1891 | February | 1 | 672,755 |
| 1891 | August | 1 | 672,755 |
| 1892 | February | 1 | 672,755 |
| 1892 | August | 1 | 672,755 |
| 1893 | February | 1 | 672,755 |
| 1893 | September | 1 | 672,755 |
There were no dividends declared between September, 1893, and the reorganization of the Central Pacific in 1899.
[514] San Francisco Bulletin, November 20, 1894. Sir Rivers Wilson was ex-controller of the British National Debt Office.