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 BEFORE THE 
 
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 COMMITTEE 
 
 ON THE 
 
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 Saturday, November 17, 1877, 
 
 PUBLISHED FOR THE USE OF THE COMMITTEE. 
 
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Buioroh Libfl^ 
 
 emcroft Library 
 
 Eemarks of C. P. Huntington. 
 
 Mr. Hu:r^TiKGTON. Mr. Chairman, I do not pro- 
 pose to say anything about the legal aspect of the 
 case, but to try to show you that it is for the interest 
 of the Government and our own interest, that we 
 come to an amiicable settlement of these matters, 
 and much that 1 have to say relates to the great cost of 
 the road w^hen it was built, and as it was built, and 
 showing what assets we have, and our ability to do 
 what w^e propose. My associates and myself have been 
 in business a great many years ; I have, for almost 
 forty-three years been in business for myself, and never 
 had any paper go to protest in all that time. I had 
 some out in 1837, and in all the great panics since. And 
 I do not w^ant to have anything go to protest connected 
 with the Central Pacific Railroad, though it is not a 
 personal matter of mine. 
 
 While these learned gentlemen have been discussing 
 the power of Congres-^, under the Constitution, to 
 change and alter these Pacific Railroad contracts, it has 
 seemed to me the real question before*u^ is'^nOt s'6much 
 a legal as a business one. Whether these legal gentle- 
 men are able to convince you that Congress has no au- 
 thority over the subject, or not, I think I can make it 
 clear to you, that, as a business transaction. Congress 
 cannot afford to take advantage of its own construc- 
 tions of the statutes, because it would not be for its in- 
 terest, nor for its credit, to do that which would be con- 
 demned among honorable men. Laying one side of the 
 legal bearings of the matter, let me try and present it 
 from the business standpoint. 
 
 . C2 H^ 
 
I am one of the few persons who originally associated 
 and organized for the purpose of building a material 
 portion of the Pacific Railr^md. Every one of the 
 Boards of Directors which began and carried on the 
 work of constructing the Central Pacific Railroad, came 
 into the enterprise at my personal request. Before do- 
 ing so, each one of them wanted to understand the con- 
 tract with the Government, and to know if these terms 
 could be depended on. We sought the opinion of the 
 most eminent counsel thereon, and they all gave the 
 same answer : that the contract could not be changed 
 without our consent, so long as the Company was not 
 in default. All our fortunes were embarked in the im- 
 mense undertaking upon this ground, wliich we are still 
 advised is unassailable. 
 
 Without this assurance, none of us, I am sure, would 
 have been diverted from our ordinary gainful pursuits 
 to the task of creating a highway for the use and bene- 
 fit of the. Government. Could we have foreseen that a 
 grave committee would, at this time, when the work is 
 done, and the country has reaped incalculable benefit 
 from it, be called upon to consider the power and pro- 
 priety of changing the terms of that contract to our 
 injury, I certainly should never have chosen for the de- 
 clining years of my life, so riskful and arduous a ser- 
 vice, and should have been spared this appearance be- 
 fore you. 
 
 My understanding was, that these words you have been 
 discussing, were inserted in the fear that the companies 
 might fail to complete the roads, and out of a spirit of 
 abundant caution, this power of alteration w^as reserved 
 in case it was necessary to put the work into other 
 hands for completion ; but it was well understood (and 
 the debates will bear me out) that there was to be no 
 forfeiture and no change to our detriment, so long as 
 we were in good faith carrying out our part of the work. 
 
 As I said, the proper question for our consideration 
 is, not so much whether Congress may, at its pleasure, 
 
alter this contract and impose new terms and conditions, 
 as whether it w^ould be fair, reasonable, advantageous 
 and honorable to attempt to do so, or to evince a desire 
 so to do, without our consent so long as we are 
 faithfully fulfilling our part of it. No impar- 
 tial or unpredjudiced referee would, I am con- 
 fident, entertain any serious doubt about our 
 right to go on, as we have done, complying with the law 
 for the remaind'T of the thirty years and demanding 
 that the Government should do the same. But inas- 
 much as doubts have arisen, apparently, in some minds 
 it may be well here, and now, to do away with all simi- 
 lar misunderstanding for the future. The Central Pa- 
 cific Company cannot accept, nor will it give its assent 
 to, any new covenant which leaves this question open. 
 Any phraseology which accords to Congress the right, 
 or privilege, to alter the terms and conditions of its 
 agreement with us, so long as we comply with them, 
 may as well be abandoned, if our consent is expected. 
 If we, on our part, should fail in any particular, then, 
 of course, there can be no such objection. Fair dealing, 
 business usage, and self-respect require no less, and no 
 more at our hands. 
 
 Lest some of you may have been misled as to the 
 origin, nature, outlay and results of this transaction 
 with the Government let me offer a few pertinent facts: 
 
 First. As to thf value of this franchise and con- 
 tract when w^e first accepted it. It is commonly 
 spoken of as a munificent and underserved bounty 
 to a few individuals, in the face of the fact 
 that the advances are treated as debts to be 
 paid at maturity, and the lands are, after we have put 
 a road through them, so lightly regarded as not to be 
 worth the application upon a second mortgage claim 
 not due for twenty years. 
 
 Well, this munificent bounty, the great charter which 
 is now sometimes spoken of, as an extravagant bargain, 
 
6 
 
 was not always so regarded. At the first meeting called 
 to organize tbe Union Pacific Company at Chicago, sub- 
 scriptions enougli could not be found to comply with 
 the act, and for months afterward the wliole franchise, 
 with allits much criticised privileges, was hawked about, 
 and might have been had for the asking. 
 
 The Central Pacific, it is true, raised money enough 
 to build and equip nearly forty miles of road, reaching 
 up into the mountains, before Congress came to our re- 
 lief, in 1864 ; but there never was a time during the years 
 while the road was climbing the Sierra Nevadas (neither 
 before nor after that amendment was passed,) when my 
 associates would not gladly have sacrificed a part of 
 their investment, if a purchaser could have been found. 
 There were then no capitalists anxious to shoulder such 
 a load, (while it was not even whispered that Congress 
 might break its faith,) so uninviting did the induce 
 ments appear. Our utmost efi'orts in this direction 
 were in vain. No parties could be found to- put their 
 money into it, but our few selves ; and I discovered 
 that the credit of my business firm was injured by our 
 connection with it. My partner and myself were re- 
 peatedly admonished that we should sink our entire 
 fortunes in the work, and get back no returns. 
 
 The assistance we received from San Francisco, Sacra- 
 mento, and other counties, contributed for local reasons 
 chiefly, gave us some help in getting through the hard- 
 est work we encountered in the Sierra Nevada Moun- 
 tains. Being remote from the great money centres, the 
 company wasjcomijaratively unknown, and without cred- 
 it. My few associates and myself, called in gold loans 
 for large amounts we had outstanding, well secured, 
 drawing two per cent, per month, to meet the labor pay- 
 rolls at the high prices then prevailing, in order to con- 
 tinue the work. The first million and a half of first 
 mortgage bonds could only be negotiated upon condi- 
 tion that we should give our personal guaranty for the 
 payment of the interest for a period of ten years which 
 we did ! 
 
No government bonds were received until May, 1866, 
 ten months after the passage of the later act, although, 
 the work w^as done more than half the distance up the 
 Sierra Nevada s. Great difficuly was experienced in get- 
 ting bonds from the Department, or money from any 
 source, until we bad reached the summit, and had got- 
 ten through the hardest and most difficult portion of all 
 our work. . 
 
 After we did receive the bonds, we found their markel 
 value had shrunk far below their estimated value when 
 the contract was made, in 1862. As fast as the bonds 
 came in they were converted into gold to pa}^ for labor ; 
 one Jarge lot of our first mortgage, I distinctly remem- 
 ber, being sold for less tlian their face value in currency 
 and turned into coin at the rate of 222. 
 
 Senator CoNKLiNG. I do not understand that. 
 
 Mr. Huntington, We sold our bonds and bought 
 gold at 222. We paid $2^2^ in currency for a dollar of 
 gold. We had to sell our bonds for less than par, al- 
 though the Central Pacific never sold its securities very 
 low. 
 
 The companies received no help, but rather hindrance, 
 from the government in marketing these currency 
 bonds. 'I'he then Secretary of the Treasury declined to 
 receive them as security for bank circulation, and al- 
 though they were full government bonds, they were 
 added as an appendix to the Monthlj^ Debt Statements, 
 instead of being incorporated with the other issues as 
 ii the}' were not part of the public, but a private rail- 
 road debt thus casting a suspicion upon them and de- 
 pressing them in the estimation of investors. My recol- 
 lection is that some of them changed hands as low as 
 90 cents in currency' . 
 
 Measured by their gold value, or by their purchasing 
 power of labor or railroad supplies, there was even a 
 greater loss. Our books show that the proceeds of the 
 $25,885,120 of government currency bonds, was $19,119,- 
 552.95. 
 
 Senator Tii u rm an . Gold ? 
 
8 
 
 Mr. Huntington. Yes ; with which to build and 
 equip nearly 750 miles of railroad through an uninhabit- 
 ed and mountainous country, affording neither timber, 
 fuel, water, ballast, food nor forage, for the most part, 
 and many thousand miles distant from its base of ma- 
 terial supplies, and yet there are many persons affect to 
 believe that the road was built and equipped out of the 
 proceeds of the Government assistance. 
 
 Many wild and absurd stories have been put in circu- 
 lation as to the cost of these railroads. Allow me to 
 furnish you with a few facts which will show you the 
 real elements and conditions with which its builders 
 contended, many of which did not exist when we entered 
 on the work. 
 
 This is to show the great cost of tlie work then neces- 
 sary, and the small amount it could be built for now in 
 comparison, as affecting the relative value of these second 
 mortgage securities : so that we see the necessity of 
 making the most now out of our assets. 
 
 Take the item of rails, for instance ; iron rails com- 
 manded during the period of construction more tlian 
 $100 per ton. Steel rails can now be bought for $40. 
 
 Freights, an important element with us, ranged from 
 $20 to $33 per ton. The last lot I shipped to San Fran- 
 cisco I paid $5 freight per ton. This was within the last 
 week or two. Insurance, also a heavy item of expense, 
 during the war was as high as 17 per cent., whereas now 
 the regular rate is 2^ per cent. 
 
 Locomotives, for which the government was a large 
 customer, cost us as high as $32,500. 
 
 I will say here that we paid six per cent. Government 
 tax on all these things over and above their prices. The 
 same kind can be bought for $7,000 at this time ; and I 
 paid as high as $4,000 freight on engines taken over the 
 Isthmus. The same machines can now be shipped over- 
 land by. rail for less than it cost then to take them down 
 and box them to be sent as they were then. 
 
 Powder, an article of which we consumed immense 
 
quantities, was not only high-priced and hard to get, 
 but it was also hard to ship, as special permission from 
 the War Department was for a long time required. 
 
 So of rolling stock of all kinds, telegraphic imple- 
 ments, and many other articles, they were very much 
 higher at the time we needed them than before or since. 
 
 Supplies for man and beast had to be hauled from the 
 terminas of the line, as the country through which the 
 work was done afforded next to nothing. Only one 
 white man lived between the Big Bend of the Truckee 
 and Bear river, a distance of about 600 miles. 
 
 The water, both for drinking and steam purposes was, 
 for long distances, unfit for use. We had to analyze 
 the water, east of the Sierras, before we dared use it for 
 steam purposes. At the very best we had to haul it in 
 trains for long distances ; and even now, after comple- 
 tion, we are obliged to convey water in many places by 
 iron pipes, in som3 instances twenty miles, for the use 
 of trains and workmen. 
 
 Water along the line of the road does not make 
 steam. It has soda and other minerals in'it which pre- 
 
 vents our using it. 
 
 The difficulties from fuel were hardly less troublesome. 
 We were required to haul fuel eastward over 600 miles 
 for the use of trains ; and even at this day we are com- 
 pelled to burn coal mined in Australia on i3ortions of 
 our road, at an expense of more than six times that of 
 some eastern roads. 
 
 After we had gotten the track laid across the moun- 
 tains, it became a problem whether we could keep it 
 open for traffic in the w^inter season. We commenced 
 putting the road under cover, and after serious en- 
 counters Avith the snow, but with very slight interrup- 
 tions, we have now reached assurance by building nearly 
 forty miles of snow sheds, all of very substantial char- 
 acter, and which include miles of snow-galleries built 
 strong enough to sustain tlie passage of avalanches of 
 snow, at a cost of over $100,000 per mile for covering 
 
10 
 
 alone ! These structures, and tlie road under them, are 
 maintained at a heavy expense, summer and winter, so 
 as to guard against the slighest interruption from storm 
 or fire. No railroad in the world, so far as I know, has 
 been constructed at such disadvantage, or is maintained 
 with similar outlay. Often we have had to put ten lirst- 
 class engines behind one snow-plow. 
 
 Notwithstanding that the road was constructed and 
 equipped with as much (^.conomy as was practicable, 
 the officers of the company using the same diligence 
 and frugality in this, as in their private business, the 
 Central Pacific Railroad, built at the time, and under 
 the circumstances it was, during a period of turbulence, 
 of inflated pHces, and of inordinate demand for money 
 and supplies for railroad purposes, necessarily cost a 
 large amount of money . 
 
 There is no difficulty in ac(5ounting for the aid rectiiv- 
 ed from the government, the proceeds of its mortgage 
 bonds, and the sums derived from all other sources ; 
 and looking back upon it now, my wonder is how we 
 ever managed to get through as well as we did, in view 
 of the discouragements and opposition we encountered. 
 For one large addition to ourexpeuditures the govern- 
 ment is indirectly responsible ; or, at all events, is the 
 chief beneficiary, while the burden must apparently 
 be borne wholly by the companies, who profited noth- 
 ing by it. By directing the Pacific Railroad to be 
 constructed from either end toward a point of junc- 
 tion, Congress instigated (I think purposely, and per- 
 haps wisely for itself) a rivalry between the eastern and 
 western parties, in order to hasten the completion of 
 the through line without adding to the government 
 assistance for this accelerated speed. The circumstance 
 that there was no point for junction so suitable as the 
 settled and fertile valley on the east bank of Salt Lake, 
 which is adjacent to the only coal deposits along the 
 route, led to an exhausting and unparalleled race in build- 
 ing on the part of both corporations to reach the coveted 
 
11 
 
 spot. The cost of many items was doubled by this 
 tremendous exertion. By this greater haste the govern- 
 ment and the country got the use of the through line 
 more than seven years before the allotted time, and 
 thereby saved several millions a year in disbursements ; 
 while we, in common with the eastern company, lost 
 proportionately by not adopting the more leisurely policy 
 of linishing the road last July, which was the time allowed 
 by the acts. The difference to this company between 
 the prices paid for labor, gold, and materials, added to 
 the difference between the prices realized for our own 
 and the government securities and those since prevail- 
 ing, would, I estimate, amount to many millions of dol- 
 lars ; all of which we might have saved by consuming 
 ten years in the construction of the last six hundred 
 miles, as the law allowed, instead of two years, as we 
 did. The loss to the government by the delay would 
 have been very much more than we suffered by this great 
 haste, and it would have appeared in the treasury led- 
 gers as disbursements, although their pages contain no 
 equivalent credit to us. 
 
 An allusion has been made by some member of the 
 committee to the vast sum of the nominal indebtedness 
 of these companies if interest were compounded. Lest 
 there be som<i confusion in your minds as to this ques- 
 tion of interest, and compounding, let me state it corect- 
 ly, so as to show whether the gov<^rnment will gain or 
 lose (in dollars and cents) by this transaction with these 
 companies; and how much? It is proper to enquire 
 what was the consideration which the government was 
 to receive in return for this annual outlay for interest, 
 all of which, be it remembeied, is to be repaid at the 
 end of the thirty years. It was the enjoyment, use, and 
 benefit of the road ; that it has. If tlierefore, it is right 
 to compound the interest against the companies, it is 
 proper to compound the amounts on the other side 
 also. What are they ? By a report made to the Senate, 
 February 24th, 1871, by the Pacific Railroad Committee, 
 it is stated, and the items are referred to, that the cost 
 
12 
 
 of government transportation in the territory west of the 
 Missouri river, between 1848 and 1864, was more than 
 100 millions in gold, and at the date of the report was 
 $8,000,000 per annum, and constantly increasing. In a 
 single year of hostilities it has been known to run up to 
 about $18,000,000. Taking it at $8,000,000, however, I 
 have the calculations of an Actuary of repute as to the 
 amount which would thus have been expended in the 
 course of each year, without the railroad, and the accu- 
 mulations upon those sums if they had been invested, 
 and it amounts for the thirty years' term, to $652,213,- 
 747.20. 
 
 Now, on the other side, with the railroads, we have 
 the annual interest payments on behalf of $55,092,192 
 bonds issued to the Union Central and Western Paci ic 
 roads, comprising the main line, and it amounts, if com- 
 pounded for thirty years, to $324,581,329.39, or a differ- 
 ence of $327,632,417.81 in favor of the government. 
 The roads certainly could not have been built without 
 this aid and these bonds. 
 
 Senator TiiumrAis'. -You have taken the average cost 
 of transportation before the railroad was built. 
 
 Mr. Huntington. But the point was that no one 
 would have built the road without this aid ; and as this 
 expense was growing, it is fair to presume that it would 
 have kept on increasing at least, that it would not 
 have lessened, if the roads had not been built. 
 
 Senator Tiiurman. But you have not deducted from 
 that what the goverment has paid to the companies. 
 
 Mr. Huntington. Certainly ; here it is. The bonds 
 that the government has issued amount to $55,092,192. 
 The actuary ha? taken that sum and counted the inter- 
 est on it, compounding it every six montlis for thirty 
 years ; and to the interest he has added tlie principal, 
 and the two together make $324,581,329,39. 
 
 Senator TiiURM AN. You do not get my idea. You 
 want to know what the government has saved in trans- 
 
13 
 
 portation. What it saved in transportation. I 
 will assume, for your purposes, though I do not 
 exactly admit it to be right, to be the difference 
 between what it pays the railroad companies for trans- 
 portation, and what it would have paid if there had 
 been no railroaid, and that instead of being $8,000,000 a 
 year, would have been only about $6,000,000, would it 
 not? The government pays your companies $2,000,000 
 a year ? 
 
 Mr. HuNTiN-axoN". About that. 
 
 Senator Thurman. So your actuary has taken 
 $8,000,000, instead of $6,000,000? 
 
 Mr. Huntington. But that was what the Govern- 
 ment was paying without the roads. Assuming that 
 the road would not have been built without this aid, 
 therefore by giving this aid, it seems to me, they have 
 saved this difference. 
 
 Senator Titurman. What the government has saved 
 is the difference between what it pays and what it would 
 have to pay if the road was not there. Then, assuming 
 it would have been $8,000,000, it is the difference be- 
 tween $3,000,000, and what it now pays, $2,000,000, that 
 is $6,000,000. The calculation should have been made 
 on $6,000,000, and not $8,000,000. 
 
 Mr. HuNTiNaTON. You may be right ; but I do not 
 so understand it. 
 
 Senator McDonald. I ask whether that $8,000,000, 
 did not embrace a very large amount of transportation 
 that is not carried by the road now, and for which the 
 government has to pay, notwithstanding the road ? 
 
 Mr. HuNTiNOTON. We take care of that country ; I 
 will show as it were when we built the Central Pacific 
 Rail Road ; as we built it along I used to tell them at 
 tlie war department they need not bother about the 
 Indians on the line of the Central Pacific ; we would 
 take care of the Indians and they should not be har- 
 med. Just as fast as we have come to the Indians, we 
 
14 
 
 have made their acquaintance, as it were. The Piutes 
 were very bad ; they had about three thousand warriors 
 and not long before we got to the big bend of the 
 Truckee, they had a fight and killed 175 men. 
 
 Senator Thurman. That estimate made by the Rail- 
 road Committee, includes all the cost of transportation 
 west of the Missouri river. 
 
 Senator McDonald. A great part of that has yet to 
 to be paid by the government in transportation provided 
 for in other ways. 
 
 Mr. Huntington. The country aw^ay uy) north was 
 not settled at all. There are now new settlements to- 
 ward the Canada border ; but our road now substantially 
 takes care of that portion that this refers to. There was 
 not anybody away up above then, as I understand ; the 
 Indians had that to themselves ; but our traffic and im- 
 migrants going across from the Missouri River to the 
 Sacramento, and vice versa were substantially on this 
 line ; and there is where the expense was, to take care 
 of that immigration. I think I am correct in that ; and 
 as we have had this figure, and it seems to me to be 
 right ; the Government saves $827,632,417^. I may be 
 in error, but the figures are no doubt correct. 
 
 This is the relative saving by the Government from 
 its engagements in this undertaking, if it should never 
 get back a dollar of this miscalled subsidy. 
 
 This is looking at the matter solely from the stand- 
 point of profits of a money broker. There are other 
 aspects in which it can be viewed and shown, the Gov- 
 ernment has been a great gainer. Prior to the construc- 
 tion of the road, the Government was the principal 
 freighter, and was its own iiisurei- of both freight and 
 teams in all that country west of the Missouri. My im- 
 pression is, that the frequent losses reported to the de- 
 partment of both freight, teams and outfit, in many 
 cases after having been hauled hundreds of miles, at 
 the rate of 1^ cents per hundred pounds, or 26 cents 
 
15 
 
 per ton, per mile, have been charged to the account of 
 casualties of war, and are not included in these trans- 
 portation accounts. 
 
 Contrast that state of things, and the differenrein the 
 disbursements now, when the railroads carry supplies 
 for about a cent per ton, per mile, (many of them less), 
 and guarantee their delivery. As an instance of the 
 multiplied economy and efficiency, the Government de- 
 rives from our faithful performance of this undertaking. 
 T may mention that in the year 1867, a single contract 
 was made for the conveyance of the fragmentary mails 
 between the advancing termini of the railroads, which ic 
 was supposed had years to run, at the rate of $1,750,000 
 per annum ; whereas, now I have no doubt, forty times 
 the weight of mails, is carried over the same distance 
 for about $140,000 per iinnum. 
 
 The Chairman. Do you mean guarantee their de- 
 livery beyond the end of your line ? 
 
 Mr. HTJN"T[NaTox. No ; only to our terminus ; but 
 the losses; were very great, as I have understood, in 
 goods crossing the plains that were taken by Indians, 
 and many cases where they got them nearly to Salt Lake 
 the mules wen^ run away and stolen, and the govern- 
 ment had to stand the loss. When you reflect there were 
 hundreds and thousands of emigrants crossing this ter- 
 ritory, unpeopled except by Indians, hostile as a rule, 
 occupying with their teams a whole season in the jour- 
 ney, and that now the greater stream of emigrants is 
 whirled over in five days, and in comparative comfort, 
 thereby saving a whole season's industry, it will be 
 seen tliat in this item alone the gain to the people far 
 outweighs the Intercast outlay. 
 
 I need not allude to the varied benefits to the commerce 
 of the country by our increased facilities for communica- 
 tion with Japan, China, Australia and the other coun- 
 tries boideri ng on the Pacific, nor the influences of the 
 railroad on the mining industries of our Western States 
 and Territories, manv of wdiich could not have been con- 
 
16 
 
 ducted without its presence. All these things are as 
 plain to you as to me. 
 
 But I confess I was astonished when one of your 
 number asked the question of one of the counsel, resi- 
 dent in this city, if the companies conceded that the 5 
 per cent, of net earnings accruing to the government 
 ought to be paid before anything was divided among 
 the stockholders ? I was surprised also to hear him re- 
 ply affirmatively, as I am sure he would not have done 
 so if he had fully understood the matter ; for why should 
 the government get its 5 per cent, when it was getting 
 all its expected collateral advantages before the parties 
 who furnished the road, and who put not only their mon- 
 ey, but also the besc years of their lives into the work, 
 get any returns for their time and money, and who derive 
 no other advantages except the returns upon their in- 
 vestment ? Such a question would not have been asked 
 if its author had reflected that the reward of the com- 
 panies for their venture, toil and time was one of money 
 only. The government was not seeking to make money, 
 in a direct way, for its own cofl:Vrs, but in an indirect 
 way by advancing the facilities of the people, and pro- 
 moting the public welfare. The returns to the govern- 
 ment were various and they were immeasurable; the re- 
 wards to the company were in money solely and they 
 were limited to a reasonable amount. The government 
 is getting its benefits in so many ways every day ; would 
 it Ije fair to ask the comjjanies to give up their single 
 compensation in order to enable it to get back its ad- 
 vances of credit also 1 
 
 If this were a mere matter of money lending and tak- 
 ing security for its return, it might be so misunder- 
 stood. We must constantly bear in mind the objects 
 and purposes of its inception. On the part of the Gov- 
 ernment, it was chiefly, if not wholly, to procure the 
 road and the manifold benefits to follow from its cre- 
 ation and use. 
 
 These considerations it has received. What were the 
 
1*7 
 
 inducements on the other side 'i Reasonable dividends 
 upon their investment. 
 
 It was oLir expectation, as it was the expectation of 
 the framers of the act, that the government transporta- 
 tion would be of such volume and would be carried at 
 prices remunerative enough to meet the interest on 
 these advanced bonds. Even after the act of 1864, gave 
 us half the freight money with which to meet the inter- 
 est on the equal amount of bonds with a precedent lien, 
 we supposed it might somewhere near approach the in- 
 terest payments of the Treasury. In this result we are 
 as much disappointed as y 3urselves ; but it is in no way 
 our fault. We should have been glad to have done all 
 the Government freighting and apply half the bills to 
 these bond claims ; and I am quite sure we have not 
 received the reasonable compensation for the transport- 
 ation services contemplated by the act, or the amounts 
 to our credit would have been much larger. 
 
 What, then, is the situation of the Government as a 
 creditor of these companies ? 
 
 So far as the Central Pacific is concerned it has a second 
 mortgage covering 860 miles of the 1,300 miles of track 
 which are in operation. As is the case in many other 
 kinds of property, the value of the road, through cir- 
 cumstances in no way under their control, but which 
 may have been subject to the control of Congress, is 
 shrinking, while the first mortgage remains, let us say, 
 stationary ; and at the same time, the second mortgage 
 is increasing in amount. 
 
 By the time both mature and become payable, it is not 
 at all likely the property will be worth their aggregate 
 sum, and if the shrinking and settling of prices should 
 continue further, it may happen that it will not suffice to 
 pay more than the first mortgages. What rational pros- 
 pect has the Government of securing this payment out 
 of'the property ^and its revenues, other than by harmon- 
 ious co-operation with the companies ? Is it not the part 
 of x)rudence, as well as of Justice, to aid them to make 
 
18 
 
 the most out of their assets, and to keep up their roads 
 to the highest standard of efficiency from the revenues ? 
 With their co-operation the Government will be able to 
 get its money all back, besides the great advantages 
 which the railroad surely confers. 
 
 The companies desire to meet this indebtedness as fast 
 as they can safely undertake it, consistently with their 
 other imperative engagements. They want partic- 
 ularly to know beforehand what they have to do, so that 
 they may prepare to do it. A fixed sum to be paid semi- 
 annually into a sinking fund, which will cancel the 
 debt by 1,905, with the lands turned in, is the extent to 
 which they could safely pledge themselves or the prop- 
 erty. 
 
 If, however, Congress will not consent to take back the 
 lands (which I am quite sure it would be for its interest 
 to do, both as a creditor of the companies, and as the 
 holder of the lands intermixed with them), then we 
 could not prudently undertake to pay all the claim be- 
 fore the year 1910. 
 
 These lands are among the assets of the company, and 
 have, in the hands of the Government, a large produc- 
 tive value, and, therefore, debt-paying power. 
 
 They had little value when granted to us, and what 
 ' value they now possess has been conferred upon them 
 by the road. 
 
 By the terms of the grant they are not a solid body, 
 but in alternate square-mile sections. 
 
 They consist for the most part of grazing lands ; and 
 the present arrangement is tantamount to a livided 
 ownership. Neither the rectangular system of surveys, 
 nor the alternating sections are favorable to the sale or 
 occupation of settlers, or to the grazing industry. The 
 land would be better for all parties if surveyed into 
 tracts, with reference to the topography, water courses 
 and springs, and thereby promote ownership of the soil 
 
19 
 
 in conjunction with its occupancy, which is now almost 
 impossible. 
 
 To survey them into sections would cost an immense 
 sum. The present relations of the companies and the 
 government in regard to these lands will have to be 
 abandoned sooner or later. The present is a fitting op- 
 portunity, and the sooner the whole belt passes into the 
 control of the government the better it will be for set- 
 tlers, for*the treasury, and all concerned. 
 
 There are some other reasons why the government 
 should not now impose any new or harsh conditions 
 npon the Pacific railroads. It is evident that, besides 
 the competition they now maintain with the water routes, 
 they will soon have to compete with a Southern Pacific 
 railroad, and perhaps a Northern Pacific also. 
 
 After these through lines are completed on either side 
 of us, the profit on through traffic will be less than now, 
 and the net earnings will be derived from the local traf- 
 fic on the great branches, on which the government has 
 no lien. 
 
 Bear in mind, therefore, that in proposing the new 
 amendment, we are placing the government in a better 
 position than it is now in ; and better than it can by any 
 possibility place itself by coercive legislation. 
 
 In this proposition we are binding 1,800 miles of track 
 and its earnings to pay a second mortgage upon only 
 860 miles, not due for more than twenty years. 
 
 This the companies, from the strongest of human 
 motives, will endeavor to live up to during the poorest 
 as well as the most prosperous seasons. 
 
 This is a mu<h safer plan than the one suggested in 
 your bill compelling us to come over here to Washing- 
 ton, from time to time, to i)ersuade the Secretary of the 
 Treasury to lighten the law upon the companies to en- 
 able them to pay their honest debts to creditors whose 
 claims have priority to those held by the Government. 
 
20 
 
 The practical working of any such plan on the first 
 extraordinary occasion for outlay from storm, accident, 
 or interruption of its income would result in disabling 
 the companies from meeting their current expenses and 
 temporary debt, and in a government supervision of 
 the working and management of the road itself a re- 
 sult which I am unwilling to believe your committee 
 desires to reach. 
 
 We have put in a proposition I speak for the Central 
 Pacific the land at a dollar and a quarter an acre ; 
 knowing it as I do, I verily believe it is cheap at that 
 price 'and great fortunes can be made by stock men in 
 taking that land and having it surveyed so that the 
 water is convenient to each tract. In the rectangular 
 system, half the sections would be worth nothing, prob- 
 ably not one in four would have any water on it at all ; 
 but, by surveying it in suitable tracts for grazing, it is 
 all valuable. We put it in at one dollar and a quarter 
 because we believe it is cheap, and if this debt was due 
 to any other interest, any individual interest, in this 
 country, they would take it and be very glad to get it. 
 
 Senator Thurmam. It is all subject to preemption, is 
 it not ? 
 
 Mr. Huntington. Not yet. 
 
 Senator Thurman. It soon will be? 
 
 Mr. Huntington. It soon will be. 
 
 The Chairman. Why is it not worth just as much 
 to your company as to the Ignited States ? 
 
 Mr. Huntington. We cannot sell it. We used to 
 go and see men on it ; we would tell them that we 
 wanted them to buy the land. They would say no, they 
 did not want to buy it. "Then pay us rent." They 
 would say, " are we on the railroad land ? We thought 
 we were on the government land. Now, tell us where 
 the line is, and we will drive the stock off on to the gov- 
 ernment land?" They used to tell us that years ago, 
 but lately they do not, because we do not say anything 
 
21 
 
 to them about it. We are selling no lands there, and 
 the government is selling none. Occasionally, men will 
 come and want a quarter section of land. We will 
 examine it, and find it is a spring affording perhaps, all 
 the water that there is on ten thousand acres. Gf 
 course, we will not sell it to them, because in many 
 cases, it would give them the control of five or ten 
 thousand acres, just as much as though they had the 
 fee. 
 
 Senator Christiancy, Are all these lands surveyed 
 yet? 
 
 Mr. HuJs^TLXGTON. No ; much of that country is in 
 small valleys, a thousand, two, three, four, five thous- 
 and acres, with a spring coming from the foot of the 
 mountains running a mile or two, and then sinking. 
 
 Senator Conkliis^g. What, in acres, in round num- 
 bers, is the quantity of land you speak of? 
 
 I Mr. Huntington. Six million acres we offer. We / 
 \ offer all the lands that we have in Nevada and Utah. * 
 
 Senator Conkling. About six million acres. To 
 what extent does the Government own alternate sections 
 there % 
 
 Mr. Huntington, Exactly the same amount, along 
 the line of the road. 
 
 Senator Conkling. When you speak of rectangular 
 surveys, you mean surveys in sections and alternate 
 sections ? 
 
 Mr. Huntington. Yes, our regular system for pub- 
 lic lands. 
 
 Senator Conkling. What water do you speak of, 
 streams or springs ? 
 
 Mr. Huntington. The water in the Great Basin, all 
 
22 
 
 sinks somewhere. There is only one river that rises in 
 the Great Basin, and runs out. 
 
 Senator Conkling. Springs that appear and disap- 
 pear ? 
 
 Mr. Huntington. Yes, sir; they all sink in the 
 basin, some at longer distances than others ; some con- 
 siderable rivers ; but almost every valley has a little 
 water some where, running a mile or two, three, four or 
 five or six, and then sinking. 
 
 Senator Conkling. You mean us to understand 
 that this land can be cut up into tracts appropriate for 
 individual ownership in grazing, so that all those tracts 
 will be supplied with water ? 
 
 Mr. Huntington. Yes, sir ; and it is what the graz- 
 ing men want. I received a letter the other day from 
 Nevada, saying that if that land could.be properly cut 
 up, it would be taken up very soon by stock men. 
 
 The Chairman. Could not that be accomplished 
 without your conveying the land, by changing the law ? 
 We shall have to change the law after that, in order to 
 make the surveys conform to the condition of the 
 country, instead of rectangular ? 
 
 Mr. Huntington. I do not know ; it would be very 
 difficult, I think. The -land ought really to belong to 
 one owner. I do believe that if we owned all the land, 
 we could realize a dollar and a quarter an acre. 
 
 Senator Conkling. Suppose yon could have your 
 6,000,000 in a body and the Government could have its 
 6,000,000 acres in a body, what effect would that have ? 
 
 Mr. Huntington. That would do better, but we 
 should still have the same difficulty at both edges of 
 our strip ; besides that there is one difficulty always 
 staring us in the face in all that outlying country. They 
 tax the lands and they make the railroad property pay 
 everything. One year we paid $39,000 gold, tax in one 
 
:S3 
 
 county. I guess it was seven- eigtlis of the tax paid in the 
 county. They willtax these lands right away from us. 
 If the Government had them they would not. If we could 
 hold them for a reasonable time and not pay taxes on them 
 we could sell them. They get up a little ring and form a 
 county with perhaps no property in it at all, and 
 what do they find ? They find j^erhaps 30 or 40 miles of 
 railroad track and the lands. They will run a county 
 from the taxes on that. A person living here has not 
 much idea of how they do those things in that outlying 
 country. 
 
 Senator McDonald, The railroad companies do not 
 take title until the expenses of subdividing the sections 
 are paid. 
 
 Mr. Huntington, That is very true, but they are 
 getting bills in here every day to compel us to take title 
 and in other ways to get at the lands before the railroad 
 company could put them to any good use. 
 
 Senator McDonald. The railroad company has not 
 taken title to much of this land. 
 
 Mr. Huntington. Not much. 
 
 Senator McDonald. Is not this proposition of yours 
 in reference to reconveying the lands to the United 
 States so connected with your other proposition that it 
 all has to go together ? 
 
 Mr. Huntington. No. I have said that if we could 
 get a little longer time 
 
 Senator McDonald. The annual payments would 
 have to be extended over a longer time if the land is 
 not taken ? 
 
 Mr. Huntington. I believe you will find it to the 
 interest of the Government to take the lands. They are 
 part of the assets ; they are good. If they are not 
 worth a dollar and a quarter to the acre, say what they 
 are worth ? They are good if they are not to be taxed to 
 death : but we had better let you have them at a 2:ood 
 
24 
 
 deal less than they are worth than undertake to own 
 them as things are to-day. 
 
 Senator Howe. Suppose the Government should not 
 want the lands, can you suggest any alteration of the 
 existing law for the disposition of the reserved sections 
 which would aid you in the sale of the lands 'i 
 
 Mr. Huntington I should say there could be some 
 way devised. I have it not in my mind now, but I think 
 some way could be devised, which is better than it is 
 now, because, now, it is the worst possible thing that 
 could be. Any change would be for the better. 
 
 Senator Cheistiancy. The Government might give 
 you all their alternate sections on one side of the road, 
 and you give the Government the alternate sections on 
 the other side. 
 
 Mr. Huntington. But the assets that are good to the 
 Government now are going to slip out of our hands. I 
 believe this debt will all be paid. 
 
 Senator Thurman. In answer to a question of Sena- 
 tor Conkling I believe you said that you thought I 
 small portion, an inconsiderable portion, of these lands 
 have been surveyed ? 
 
 Mr. Huntington. I do not know how many. Some 
 of them have been. 
 
 Senator Thurman. I think nearly all of them have 
 been surveyed. 
 
 Mr. Huntington. I had thought not. 
 
 Senator Thurman. Much the larger portion. 
 
 Mr. Huntington. You may be correct, but I think 
 not. 
 
 Senator McDonald. They have been surveyed, but 
 the law now requires the company to pay the expenses 
 
- 25 
 
 of the subdividing surveys before they can get the title, 
 and that is not done. 
 
 Senator Thurmais^. That was the law in regard to 
 the Northern Pacific. 
 
 Mr. Huntington. It is on the Central. We have to 
 pay the survey fees before we get title. 
 
 Senator McDonald. It has been decided that until i 
 the title has been issued to the company, the property is/ 
 not taxable. 
 
 Mr. Huntington. Before we can get our patent we 
 have to pay for the survey. They have bills here now 
 to make us pay the taxes, anyhow. 
 
 Senator CoNKLiNG. I have heard it affirmed and de- 
 nied that under the bill which was j)roposed last winter 
 and is here now, the companies could not only live and 
 thrive, but pay four per cent, of dividends to stock- 
 holders, meaning four jjer cent, on the market value of 
 the stock. I wish you would say whatever you think 
 is true on that point, giving your reasons for it. 
 
 Mr. Huntington. Well, that has been correct for 
 the last few years ; if you. include all the roads operat- 
 ed by the company, but I do not believe it will be when 
 the Southern Pacific is through, which will be soon. I 
 think in the next five years the Southern Pacific road will 
 be through to the Rio Grande. We occasionally have a 
 very dry year (we had this year) called " off years " 
 in California. These branch roads of ours, which the 
 Government did not aid, running up through those great 
 fat valleys in California, will almost always make net 
 money. This year, to be sure, the San Joaquin branch 
 has given us nothing, scarcely ; but we generally make 
 some money there. They are very rich valleys and are 
 very large. We have one branch 150 miles from Sacra- 
 mento to Redding, and one 146 miles up the San Joaquin ; 
 valley, and we have several shorter branches that will ' 
 always pay. 
 
26 
 
 Senator Con KLING. To be sure then that I understood 
 you, so far your answer is that speaking of the 1,300 
 miles of your road, 800 of which are aided road, and 
 taking the last three or four years prior to this, under 
 the proposed bill they could live and pay a dividend of 
 four per cent, on the market value of the stock? 
 
 Mr. Huntington. J should think we could. I say 
 we have our "off years," our particular years when we 
 do not make anything, but they would probably average 
 that. 
 
 Senator CoNKLiNG. You put in the whole 1,300 miles 
 to come to that statement ? 
 
 Mr. Huntington. Yes, sir. 
 
 Senator Oonkling. You exclude the present year. 
 Why do you do that ? 
 
 Mr. Huntington. This year we have had no rain 
 over there. We sometimes get eighty or ninety inches 
 of rain in places. This year we did not get over four 
 or five inches in places. 
 
 Senator CoNKLiNG. What are the hardships or objec- 
 tions in this bill proposed ? 
 
 Mr. Huntington. It brings us to Washington for 
 one thing. It would bring us here every year 
 
 Senator Conkling. For what 'i 
 
 Mr. Huntington. We should get three or four tele- 
 grams that somebody has introduced a bill to confiscate 
 the whole property. This bill settles nothing. 
 . What the Central Pacific R. R. Co. wants is a final 
 / settlement of all these matters with the Government, and 
 an act that calls for a fixed sum, to be paid semi-annu- 
 /ally, in lieu of all other payments, and an act that can- 
 not be changed so long as the company fulfills its 
 requirements. 
 
27 
 
 Senator Coistkling. What you mean is, that the pro- 
 posed bill leaves it open and unsettled ? 
 
 Mr. HuNTiT^TGTor^. Yes brings us here to see the 
 Secretary of the Treasury and others. 
 
 Senator Conklikg. What other difficulties are there 
 in the proposed bill ? 
 
 Mr. Huntington. I read it over and it is objection- 
 able. One is, that if we accept this, next year you may 
 call for the v^hole earnings. That is one objection. We 
 could not accept anything that was not a finality, if we 
 accepted it. If it was to pay but a thousand dollars a 
 year, for my own part I should contest it just as closely 
 in the Courts as though it was to pay a very much larger 
 sum ; because, if we accept such a bill we are all at sea. 
 
 The Chairman. That is to say, you have no con- 
 fidence in the upright judgment of Congress, in dealing 
 between you and the people of the United States ? 
 
 Mr. Huntington. We have got a contract, as I un- 
 derstand it. I labored with all my associates night 
 after night to get them in, and they all referred it to the 
 most eminent counsel on our side, and this side, to see 
 what the law was, and they all said it could not be 
 changed ; and, nevertheless, we find every session some- 
 body in Congress making an effort to change it without 
 the sanction of both the contracting par tie . 
 
 Senator Conkling. I have heard, gentlemen, for ex- 
 ample, during these hearings, Mr. Atkinson and others, 
 allude in very general terms to the inadmissible features 
 of the proposed bill, its hardships and evil tendencies, 
 n you had the bill before you, as you have not, or if 
 you had it freshly in your memory, as you do not seem 
 to have, I wanted to ask you to point out to the under- 
 standing of a man whose understanding is as cloudy as 
 mine on such subjects, what those matters are to which 
 
allusion is so frequently made ? You have indicated in 
 general terms one or two of them. On the other side, 
 I hear, for example, the acting Chairman of the sub- 
 committee say that he has looked into this bill, and 
 that he is satisfied that in a business aspect there is no 
 hardship about it ; and I would like in some way to be 
 directed to the points in issue, and the respects in which 
 those two affirmations differ, and then to the truth of 
 that difference. 
 
 Mr. Si/N'ry^OTON. I think I could take the bill itself, 
 and sit down and read it carefully line by line, and I 
 could show that there is a number of them. 
 
 Senator Howe. Could you not make this a final set- 
 tlement, as well as the one proposed by the companies ? 
 
 Mr. HuNTiNTGTOis-. We could not live under this bill. 
 
 Senator Howe. Suppose you could live, if it was as 
 advantageous as yours, and make it a final settlement ? 
 
 Mr. Huntington. Certainly ; but I should want it 
 in the bill, that whatever we agree to, so long as we ful- 
 fill that, we cannot be touched. 
 
 Senator Davis. You do not want any loop-holes to 
 creex") out of ? 
 
 Mr. Huntington, No, we want to pay the money, 
 and if we do not, then, of course, it is proper and right 
 that the government should make the companies do it. 
 
 We want a certainty ; to know just how much we 
 have to pay, and if it is such an amount as we think w^e 
 can pay, we will accept the bill. 
 
 Senator McDonald, The principal objection is that 
 by this bill we are assuming the power to make these 
 changes, irrespective of the will or consent of the com- 
 pany, as I understand it. 
 
 Mr. Huntington. That is one objection, and a very 
 
f9 
 
 grave one ; but we want to pay ; we offer to pay the 
 debt and its interest ; we offer to commence paying 
 twenty years, and more than twenty years, before it is 
 due, and to pay it all within ten years after it is due. 
 
 Senator McDonald. Your proposition, leaving out 
 the land question, is substantially this, except as to the 
 different amounts that are provided, and the different 
 mode. You propose to make direct payment into the 
 treasury instead of making a sinking fuirinre^rott Libr^T^ 
 
 Mr. Huntington. We propose to make a sinking 
 fund in the Treasury to pay the money to the govern- 
 ment. 
 
 Senator McDonald. And the difference is in the 
 amount which your proposition would set apart to be 
 paid annually, and the amount this bill would create as 
 a sinking fund. 
 
 Mr, Huntington. We pay six per cent., (and I 
 believe there is no dispute on that point), that when we 
 pay the government six per cent, we should get six per 
 cent, on the sums we pay into the fund before the debt 
 is due, and of course we have the interest computed 
 every six months. 
 
 The Chairman. What do you pay six per cent, on ? 
 
 Mr. Huntington. The government bonds. That is, 
 it is charged to us. 
 
 The Chairman. You mean the six per cent, the gov- 
 ernment has paid ? 
 
 Mr. Huntington. But that is running against us. 
 
 The Chairman. Do you mean to say the government 
 is to charge you six per cent, intei^st for the payments 
 it has made for interest on the bonds 1 
 
 Mr. Huntington. It charges the six per cent, as it 
 
30 
 
 matures. There is no interest due for thirty years ; but 
 whatever the simple interest is at the end of thirty years 
 we shall owe to the government. 
 
 The Chairman. That is, what the government is 
 paying semi-annually, at the end of thirty years will be 
 due, but without interest, as I understand you. 
 
 Mr. Huntington. Certainly. 
 
 The Chairman. What is the six per cent, you are 
 paying ? 
 
 Mr. Huntington. It is what we propose to pay and 
 it runs against us. I say we pay it. It is running 
 against the company. If we pay any before it is due, 
 so much as we pay we certainly ought to have interest 
 on. I would leave that to ten bankers in New York, and 
 you can pick them all, and if they do not say we are en- 
 titled to compound interest, as it were 
 
 Senator Conkling. That is to the discount ? 
 
 Mr. Huntington. Yes, sir ; for all we pay before it 
 is due, you may have your action if there is one out of 
 the ten does not say we are entitled to it. 
 
 The Chairman. I had the impression that Congress 
 stood m a different light between you and the peojjle of 
 the United States, if it has the power to act at all, as the 
 Supreme Court has, to act on the question what the law 
 now means. I beg you to understand I have no case be- 
 tween you and other men. 
 
 Mr. Huntington. Excuse me for using that lan- 
 guage. I did not mean it in any offensive way. 
 
 The Chairman. I know that, but I thought you were 
 stating a very great error. Now, I will beg to ask you 
 a question to get at exactly what you mean. If I under- 
 stand you, you think that the eempanies, on whatever 
 
31 
 
 you do pay, ought to be allowed six per cent, interest as 
 a sinking fund with annual or semi-annual rests, bet ause 
 you say the sum that is being charged to you on the 
 other hand is the same thing. But J do not understand 
 you to say that the United States has a right to charge 
 you with any interest on the money it pays, but only 
 with the sum of money (which happens to be six per 
 cent on the bonds) that it has paid. 
 
 Mr. Huntington. No ; the law, as we understand it, 
 does not require it ; we were told by some of the best 
 legal minds in the country there was nothing due until 
 thirty years, except half the services and five per cent, of 
 the net earnings after completion, and on that my belief 
 is based. 
 
 The Chairman. I am not asking you to argue the 
 question, but I merely want to get at what you mean 
 what you mean by the companies being obliged to pay 
 six per cent, is that the company is obliged, when the 
 proper time comes, to reimburse the United States for 
 these coupons that are being paid, from time to time, 
 without interest on the coupon. 
 
 Mr. Huntington. Yes the interest you pay on the 
 bonds. 
 
 The Chairman. But the very sum that the United 
 States paid. That is what I understand you to mean. 
 
 Mr. Huntington. Yes. 
 
 The Chairman.* Now, I want to ask you so that I 
 may understand you, whether, supposing Congress has 
 the power by the consent of your companies, under the 
 law, to rectify these things according to its judgment of 
 what is just between th;e treasury and you presuming 
 that to be so, and I do not say that it is not then is 
 not the substantial objection that you have to this pro- 
 posed method of accumulating money, that it asks you 
 to do too much, beyond your ability fairly, in order to 
 
32 
 
 give something to your stockholders beyond your 
 ability to accomplish ? 
 
 Mr. HuNTiNGTON^. That is the main reason. Any- 
 thing that we accept we want to abide by. We want to 
 pay some money and have it settled, as much on our 
 side, I believe, as the government wants it done. 
 
 Senator Thurman. I would call your attention, Mr. 
 Huntington, to this : While it certainly is very desirable 
 and perhaps required by justice that this sinking fund 
 should keep down the interest that you have to pay on 
 an amount equal to that which is put in the sinking 
 fund, yet inasmuch as the interest runs against the com- 
 pany without any rest at all, if the accumulation of the 
 sinking fund is such that it wdll meet that interest which 
 the company ultimately has to pay, that is all that 
 equity would require, is it not ? 
 
 Mr. HuN^TiNUTON. No; the equities would allow us 
 compound interest on all sums paid in advance of matu- 
 rity. The stockholders expected a very mucli larger 
 return, because the law contemplates ten per cent. ; 
 they have not averaged three. 
 
 Senator Thiirman. But your proposition amounts to 
 this, reall}' that the government should borrow money 
 at six per cent., payable semi-annually for twenty-three 
 years, when the government can borrow all the money 
 it wants at about four per cent. 
 
 The government can sell its four per cent, bonds at 
 par, or substantially so, as it has been selling how long 
 it will continue to do so, I do not know it sells its 41 
 per cent, bonds at more than par ; and under such cir- 
 cumstances, you would hardly expect the government 
 to borrow money for 23 years at the rate of six per cent. , 
 X)ayable semi-annually. 
 
 Mr Huntington. My impression is, that they can 
 use all the money they will get from this source, in tak- 
 ing in their five twenties that do bear six per cent, gold 
 interest. 
 
Senator Thurman. If they would agree to pay that 
 interest, and should call in the six per cent bonds, they 
 would gain nothing. 
 
 Mr. HuiNfTiNGTON.~In every six months, if they 
 would take the money they pay off the coupons, and on 
 re-investing that, there is your fund without any trou- 
 ble. 
 
 Senator Thurman. They would make nothing. It 
 would be simply an extension of the five- twenty loan, 
 which they have the right to call in now, for 23 years. 
 
 Mr. Huntington. My answer is, that it was not ex- 
 pected that the government was going to speculate and 
 make money from these companies. The government gets 
 a vast return for its outlay of interest by the existence 
 of the road, and it will get back what it has paid out 
 beside. It has not paid the principal sums yet, but 
 pays interest on them, because it had to borrow at the 
 time the monej^ was wanted, and that is a conclusive 
 reason why it is not entitled to interest upon interest. 
 If it gets back all it has paid out as interest, that is all 
 it can rightly expect from the companies.