Chapter 11

_History of the Line since its completion._

Government Indebtedness--Absorption Other Lines--Receivership--Train Robbers--Settlement With Government.

Upon the completion of the Union Pacific the rates for both freight and passengers were fixed at what now seems a very high figure. Thus passenger fares locally were ten cents per mile. Complaints arising, the matter was taken up in Congress and steps taken towards the appointment of a Board of Commissioners who should have authority to fix rates, both freight and passengers.

The whole question of earnings and expenses of the line was an unknown quantity and as soon as experience demonstrated what was reasonable and just, the Company voluntarily adjusted their schedules,--until today the rates over the line are about on a parity with those charged by eastern lines through much more thickly settled states.

In 1869 the agitation looking to a bridge across the Missouri River in place of the slow and often unreliable ferry culminated, and on March 11th of that year the structure was commenced. Three years were required for the work and the first train crossed on March 11th, 1872. By an agreement made with the city of Omaha that city was to be made the eastern terminus regardless of the bridge. This, however, was upset by the decision of the Supreme Court of the United States declaring the bridge an integral part of the line and that it commenced in Iowa not Nebraska.

In 1870 the question of repayment of the Government Loans made in the shape of Bonds arose,--more particularly that of the interests accruing thereon,--the bonds themselves not falling due until 1895-1899. It was a question whether the lines were to pay this interest in cash or through services rendered in transporting men, materials, and mails for the Government. The matter soon got into the Courts and their decision as rendered by Justice Davis of the Supreme Court of the United States so fully and explicitly covers the ground as to warrant the somewhat lengthy extracts given below:

In his opinion, Judge Davis said, "This enterprise (the building of the Pacific Railroads) was viewed as a national undertaking for national purposes and the public mind was directed to the end rather than the particular means to be employed for the purpose. Although the road was a military necessity, there were other reasons active at the time in producing an opinion as to its necessity besides the protection of our exposed frontiers. There was a vast unpeopled territory between the Missouri River and Sacramento which was practically worthless without the facilities afforded by a railroad for the transportation of persons and property. With its construction the agricultural and mineral resources could be developed, settlements made, and the wealth and power of the United States essentially increased. And then there was also the pressing want in times of peace even of an improved and cheaper method for the transportation of the mails and supplies for the army and the Indians."

The policy of the country, to say nothing of the supposed want of power, stood in the way of the United States taking the work into its own hands. Even if this were not so, reasons of economy suggested it were better to enlist private capital and individual enterprise in the project. This Congress undertook to do, and the inducements held out were such as it was believed would procure the requisite capital and enterprise. But the purpose in presenting these inducements was to promote the construction and operation of a work deemed essential to the security of great public interests. Besides it is fair to infer that Congress supposed that the services to be rendered by the road to the Government would equal the interest to be paid. Congress well knew that the Government bound itself to pay interest every six months and the principal at the time the bond matured, resting satisfied with the entire property of the Company as security for the ultimate payment of the principal and interest.

This settled the interest question and the next one to arise was the question as to the payment of five per cent, of the net earnings towards the extinguishment of the Government indebtedness, as provided for in the act of 1862, viz., "And after said road is completed, until said bonds and interest are paid, at least five per centum of the net earnings shall be annually applied to the payment thereof." By act of Congress, June 22nd, 1874, the Secretary of the Treasury was directed to require this payment, failing which, to bring suit. The Supreme Court decided this in 1878 that the Company must pay this five per cent and defined net earnings as what was left out of the gross earnings after deducting all the expense of organization, operation, or for betterments paid out of earnings.

In 1878 the so called "Thurman Act" became law, by which a sinking fund was established looking to the extinguishing of the Company's indebtedness to the Government. This sinking fund was to be made up of one half the amount accruing on Government Transportation, the five per cent of net earnings, plus enough more of the earnings to make up in all twenty-five per cent of the total net earnings, but not to exceed eighty-five thousand dollars per annum,--this sinking fund to be invested by the Secretary of the Treasury in Government Bonds.

Up to 1879 the policy of the Company was to transfer all through freight at its eastern termini, none of its equipment being allowed to leave its own rails.

Soon after the absorption of the Kansas Pacific Railroad and through it the Denver Pacific Railroad, the Union Pacific entered upon a policy of extension by the absorption of other roads and building of branch lines.

Under this arrangement the Texas lines--Fort Worth, Texas, to Denver, Colo., eight hundred and one miles--were completed and added to the system. This line was built under the name of the Denver, Texas and Gulf (formerly Denver and New Orleans), the Fort Worth and Denver City and the Denver City and Fort Worth Railroads.

In 1880 the Railroad from Atchison west--originally the line that was to have connected with the Union Pacific Railroad at the hundredth Meridian, known as the Central Branch Union Pacific--became part of the system by purchase and was leased to the Missouri Pacific Railway Company who have since that time operated it.

Another line added to the system was the narrow (three foot) gauge line from Denver to Leadville and Gunnison. This line was commenced in 1873 under a Charter from the Colorado Legislature, reaching Buena Vista, February 22nd, 1880 and Gunnison, the summer of 1881. It was absorbed by the Union Pacific on January 1st, 1881.

The Utah and Northern was commenced in 1871 by the citizens of Utah and reached Logan in 1873 and Franklin, Idaho, in 1874. The means for building this road was raised by the people of Northern Utah with great difficulty, much of it being donated in labor,--in grading, track work, right of way, etc. After an attempt to operate as a local line more or less successful, it was sold to the Union Pacific Railroad in February 1877 and by them extended to Silver Bow, Mont.--Huntington. Ore., with a branch connecting the main line of the Union Pacific at Granger, Wyo., with Pocatello, Idaho, on the old Utah and Northern.

On May 17th, 1869, one week after the ceremonies at Promontory, the Utah Central was commenced by the Mormons, Brigham Young being President of the Company. It was completed Ogden to Salt Lake City, January 10th, 1870. The work on the line was done very largely by the Mormons in exchange for stock, its equipment being turned over to them by the Union Pacific as part payment (to the Mormons) for work done on the grading of the line.

The Utah Southern--Salt Lake City to Frisco, Utah, was commenced in May. 1871, and completed in June 1880, and absorbed by the Utah Central in 1881.

In 1873 the line from Julesburg to Denver was located and most of the grading done in that year and the two following. Financial stringency together with complications arising over their relations with the Kansas Pacific Railway forced the abandonment of the project. After the consolidation in 1880 the line was recommenced, practically new grades being necessary. It was completed in 1882, the work being done under the Colorado Central Railroad Charter.

All of the above lines were absorbed by the Union Pacific Railway and were a part of that system up to 1893 when the total mileage reached eight thousand one hundred and sixty-seven, made up of one thousand eight hundred and twenty-three miles Union Pacific and six thousand three hundred and forty-four miles, owned, leased and controlled. On the 13th of October, 1893, the United States Court at Omaha appointed S. H. H. Clark, Oliver W. Mink, and E. Ellery Anderson, Receivers, and in the following month Frederick R. Coudert and J. W. Doane were added to represent the interests of the United States, this receivership being forced on the Company by the very general business depression of 1893 and the consequent decrease in traffic and earnings. At the time of appointing receivers for the main line, the Texas Line and the Denver, Leadville and Gunnison (South Park) were segregated and placed under the control of separate receivers. The Oregon Short Line and the Oregon Railway and Navigation Company reverted to the hands of the original Companies, and have ever since been operated independently, although the controlling interest in both lines is owned by the Union Pacific Railway Company. In all, three thousand one hundred and thirteen miles of affiliated lines were segregated from the parent Company. In February, 1899, the "Julesburg Cut Off"--Julesburg to Denver--reverted to the Company, having been operated by the Receiver of the Union Pacific Denver and Gulf Railway in the interim.

Among other troubles which the line has encountered during its thirty-eight years existence has been that of train-robbers. These were a class of men the outgrowth of Western desperadoism, now happily passed into history. Without the fear of God, Man, or the Law, they would singly or in bands attack trains, rob the mail, express and sometimes the passengers.

Among the most noted cases of this kind were the Big Springs Robbery, occurring September 18th, 1877, when a gang of twelve masked men took possession of the station at that point, bound and gagged the employees, cutting the telegraph wires, and upon the arrival of the western train took possession of it, securing sixty-five thousand dollars from the express car, and thirteen thousand dollars and four gold watches from the passengers,--then mounting their horses they rode off. A reward of ten thousand dollars for their arrest immediately followed and three of the robbers were caught and hung. About one half of the money was recovered when they were captured. It is said the balance of the gang were apprehended and dealt with by a frontier Court, 'Judge Lynch' officiating, this however is tradition, its truth not being known.

Another robbery was that committed by Sam. Bass and associates who held up the west bound Pacific Express train securing from the express car some sixty thousand dollars in gold. This money was all recovered and most of the band either killed or arrested.

Another great event of this kind occurred in the hills of Wyoming, west of Cheyenne during 1898. The first section of the Overland West Bound carrying the mail and express was flagged and brought to a stop. A culvert behind it blown up with dynamite to prevent the second section interfering, and the express cars were then looted and the robbers rode off. Persistent pursuit lasting for years, however, brought them one by one to justice, one being killed near Kansas City while resisting arrest, another killed at Cripple Creek under similar circumstances.

In 1897 (January 1st) the present Company, Union Pacific Railroad Company, was organized under the laws of Utah as successor to the Union Pacific Railway Company.

During the construction days, Wells, Fargo and Company operated the Express service over the line. On completion the Company organized its own express "The Union Pacific Railroad Express" which continued to handle the express until re-organized as the Pacific Express Company.

Congress was appealed to in 1893 to pass a refunding bill, but failed to act.

Numerous unsuccessful attempts were made to reorganize the property, but this was impossible with the debt to the Government in an unsettled condition. Finally in 1899 an agreement (see foot note) as reached between the re-organization Committee and the Attorney General by which the line was to be foreclosed and the debt adjusted. This was accordingly done in 1899. The account standing:

Amount due Government. From Union Pacific. From Kansas Pacific. Principal $27,236,512.00 Interest 31,211,691.75 ------------- Total $58,448,203.75 $12,891,900.19 Less Sinking Fund 18,194,618.26 6,303,000.00 ------------- ------------- Balance due $40,253,585.49 $6,588,900.19

and these amounts were accordingly turned over to the United States Government closing the account.

[Footnote: The agreement In question was signed by Sidney Dillon, President of the Union Pacific Railroad Company; Robert B. Carr, President of the Kansas Pacific Railway Company; W. A. H. Loveland, President of the Colorado Central Railroad Company, and concurred with by Henry Villard and Carlos S. Greeley, Receivers of the Kansas Pacific Railway.

It provided that the three lines should be operated as one property, under the general direction of the Union Pacific Railroad Company. The gross earnings to be pooled and apportioned between them on certain specified agreed per cents, based on the earnings of the respective roads during the preceding year, the arrangement to be binding for fifty years and to be subject to the approval of the Court in whose hands the Kansas Pacific Railway then was.]