Oregon Historical Quarterly/Volume 25/The History of the Oregon and California Railroad, part 2
THE HISTORY OF THE OREGON AND CALIFORNIA RAILROAD—II
By John Tilson Ganoe
- IV. Extension Under Henry Villard.
- A. Henry Villard.
Gaston, writing on the "Genesis of the Oregon Railway System" says of Villard: "Henry Villard was born in 1835 of an honorable and influential family in Speyer, Kingdom of Bavaria, Germany. In the revolution of 1849 his father was a loyalist, and the presiding judge of an important court. Young Villard was at school at the Gymnasium, wore a red feather in his cap and refused to pray for the king. For this offense he was suspended and managed to get out of his youthful disloyalty by going to a school in France. Subsequently pardoned, he returned and completed his studies at the University of Munich. He came to the United States in 1853, tarried with relatives near Belleville, Ill., for a year, then drifted into journalism, became a war correspondent in the Civil War, made friends with influential people, attracted attention by his ability and genial manners, made some money in speculations, went back to Germany on a visit and made financial friends at Frankfort, who afterwards employed him to look after their interests in investments in America, and put him on the highway to his great success. He was a man of most engaging and genial manners, with nothing of the hard selfishness or avaricious grasp of the typical rich man. No man was more considerate or generous in his praise and assistance to those who worked with or under him or whose work he had made use of. In the days of his prosperity his purse was open wide to all works of charity and benevolence, of which in Oregon was $50,000 to the State University for an irreducible fund, at least $400 of the interest from which to be used annually in the purchase of books for the University library. He gave a like sum to house the orphan children at Portland. No act of littleness, meanness, oppression, injustice, or dishonor ever stained the escutcheon of his noble career; and he sleeps well on the banks of the Hudson."
This is the man who was to be thrown against Ben Holladay; this is the man who was to reorganize the Oregon and California Company for the bondholders, who was to extend construction of the road and guide not only the affairs of the Oregon and California Company, but of several companies, and who was to bring Oregon railroads into an organized plan, related to the rest of the United States through a transcontinental railway.
- B. The Work of Villard.
The Oregon and California Company by its failure to pay the interest due, became liable to assumption by the bondholders. This meant the bondholders would have to go through foreclosure proceedings, so rather than do this, it was agreed that a compromise should be made. A compromise contract was drawn whereby the bondholders gained a right to elect three of the directors of the company. Although the directors were to manage the affairs of the company, all financial dealings must be accepted by a financial agent who was to be chosen later. Should the company fail to earn enough to pay the interest on the bonds, Holladay was to supplement with his own funds.
No sooner had Villard left when Holladay began to try to break the contract. He had by the contract personally obligated himself and could not make the payments. Again the question of assuming the road came into prominence, but again the distance between the two parties and the cost of litigation brought compromise so it was agreed that by a small payment Holladay would surrender control of the Oregon and California Railroad and the other companies controlled by him. The bondholders of the Oregon and California Railroad Company were to furnish whatever new steamers necessary for the steamship line, but in return they would become owners of the company as soon as the creditors of the steamship company were paid off; and towards this some had al- ready been paid. Likewise, they obtained an option on the claim of the creditors against the Oregon Central for which they were to pay twenty-five per cent of the amount of the creditors' claims. This not only gave the bondholders control over the three companies, but brought the companies under one ownership and management so they could be managed as a unit.
Villard's plan was to attract immigration to Oregon and thus build up the railroad to a paying proposition. He had been struck with the wonderful prospects of the country. It was only his emphasis upon the possibilities of the country in his report to the bondholders that made the agreement acceptable to the bondholders.
Villard, however, had overestimated the prospects the same as all others who had attempted an estimate be- fore him. Even his attempts to aid by immigration were of no avail. The following table compiled from Poor's Manual gives some indication of the operations of the company up to the time of reorganization.
Operating Ratio Net Earnings including taxes $194,844.99 63.33% 237,665.35 72.59% 137,843.30 83,426.33 Earnings Expenditures 1876 1878 1879 1880 $576,791.42 648,116.38 503,053.02 405,219.54 $356,701.12 410,451.03 365,209.72 321,793.21
The bonds were supposed to bring seven per cent, but it will be seen that taking all the net earnings of the road they brought at no time more than three per cent, and in 1880 the net earnings amounted to less than one per cent. The freight instead of increasing began to decrease The following table gives a view of distribution of earnings and shows the marked fall in the amount of freight carried.
Year 1876 1878 1879 1880 Passenger Traffic $187,773.53 232,860.76 198,336.50 174,069.95 Freight Traffic $338,036.84 345,482.17 247,650.52 179,832.03 Mail and Exp. Service $29,385.01 30,414.60 31,746.72 26,959.04 Minor Sources $21,596.04 39,359.35 25,319.28 24,358.52
With a fall in the traffic and consequent fall in earnings the company thought to gain traffic by building on through to California. But they did not have the capital, so it was decided to reorganize and force Holladay out altogether, and then issue bonds and complete the road to the state line.
The reorganization was made in May, 1881. By this reorganization all of the old Holladay stock was wiped out and the bonds converted into stocks. Common stock was issued to the amount of seven million dollars and preferred stock (7%) to twelve million. To build more road, six million dollars worth of bonds were issued. These bonds were first mortgage, six per cent, forty year gold bonds and were to be due July 1, 1921.
On May 25,1883, the Oregon and California Company entered into a contract with the Oregon and Transcon- tinental Company under which the latter was to complete the line from Roseburg to the Southern boundary of the state and from Corvallis to Junction City.
The Oregon and Transcontinental Company was a company organized by Mr. Villard to gain control of the Northern Pacific Railroad Company. Mr. Villard's success in the railroad business had led him to greater undertakings. He had asked his friends to loan him eight million dollars for an unnamed purpose. Within twenty-four hours he had the eight million. He then called a conference and laid before them his plans of a new company and asked for a subscription of twelve million more which was immediately forthcoming. Upon this subscription the Oregon and Transcontinental company was organized with a capital stock of fifty million dollars. Thirty million dollars worth of this stock was given to those who had subscribed to the twenty million dollar fund.
The Oregon and Transcontinental Company did gain control of the Northern Pacific and immediately pushed construction work for that company as rapidly as possible.
For the construction of the Oregon and California Railroad, the Oregon and Transcontinental Company were to receive $3,670,500, six per cent, first mortgage bonds, and $3,750,000 seven per cent, second mortgage bonds. The company had in October, 1880, obtained control of the Western Oregon Railroad, a road running from Albany to Lebanon. This combined with the company's own line and the Oregon Central West Side had boosted the mileage of the Oregon and California Railroad. It was estimated with the extensions the company would have five hundred and twelve miles of road in Oregon. The plan was to issue first mortgage bonds at six per cent to the extent of $20,000 per mile and second mortgage bonds at six per cent to the extent of $10,000 per mile. Considering the road five hundred and twelve miles, this would make the funded debt $15,360,000. Under the contract for construction, the Oregon and Transcontinental Company built the road to about a hundred miles north of Ashland.
At the same time the Oregon and California Company made this contract with the Oregon and Transcontinental Company, another one was made with this same company whereby the Transcontinental company leased the road for three years. The Transcontinental company was to pay all fixed charges and dividends at the rate of two and a half per cent. The Transcontinental company was granted an option for 999 years whereby they would pay a rental equal to thirty-five per cent of the gross earnings, and if there was a deficit they would pay all the expenses and, nevertheless, give a two per cent dividend. The company was allowed six hundred thousand dollars worth of second mortgage bonds for a guarantee of interest.
Villard, however, had overestimated his ability and underestimated the task before him. He had taken the estimates of the engineering department on the Northern Pacific contracts without a question. The report of the chief engineer revealed that the building estimates of the Oregon and Transcontinental Company had been underestimated fourteen million dollars. Nevertheless, Villard was able to complete the Northern Pacific. Villard had expected that the earnings of the road would soon relieve the stringency, but instead of earnings came deficits and by December, 1883, he came to the realization that he was practically insolvent. The result was, he was deposed from the presidency of the Oregon and Transcontinental Company, the Oregon Railway and Navigation Company and the Northern Pacific.
The failure of the Oregon and Transcontinental Company meant they could not fulfill the contracts with the Oregon and California Company. Hence, upon default of interest in 1884 the contracts were rescinded and the Oregon and California Company again began to operate the road itself June 20, 1884. The Transcontinental Company waived all claims to $400,000 worth of first mortgage bonds and $110,000 second mortgage which was due for construction of the last twenty miles of road. These bonds were used to provide for back interest. The company agreed to pay all money due on construction and to turn over to the Oregon and California Company all the second mortgage bonds which it had received for $446,000. These bonds amounted to $2,200,000.
Still the road was not completed. Villard still remained as president of the company. Little returns could be expected while the road was not completed, so Dec. 22, 1884, the stockholders authorized another bond issue. Be- sides this, they increased the stock of the company. The preferred stock was increased to $15,000,000 and the common stock to $10,000,000.
Just how the company expected to finance the project is a mystery. Certainly they could not do it on their earn- ings. It is true, the earnings did show an increase, but still not enough to warrant raising the funded indebted- ness to over eleven million dollars. The earnings since 1881, the year of the reorganization of the company, are show in the table below.
Operating Operating Earnings Expenditures Ratio Net Earnings $788,488.18 $473,902.12 60.1% $314,586.06 1,044,334.44 715,531.88 328,802.56 Under Oregon and Transcontinental Company. Gave no figures for publication. 1,014,427.47 762,832.68 75.20% 251,591.79
At the average rate of $300,000 per year for earnings, the company would only be paying about fifty per cent of the interest on the eleven millions dollars funded debt. It is true there was some income from land sales at this time, but on the whole this was almost a negligible item, although for one year the sale of land did bring in over $100,000.
Inevitably another reorganization was due, and it was not long before the inevitable came. The company defaulted payment on the first mortgage bonds in 1885 and as a result of a suit of Lawrence Harrison, a bond- holder, the company was placed in the hands of the re- ceiver, and Richard Koehler, former vice-president and manager of the company, was appointed receiver.
V. LAST PHASES OF THE COMPANY. 1885—
It now remains only to show how the company was finally completed under lease to the Southern Pacific Company and to show the changed conditions after the assumption of management by the Southern Pacific. The company up to this time, as we have seen, had been an independent road which had at no time been a paying proposition. After the assumption by the Southern Pacific Company, it became not only a paying proposition but an integral part of that system. Before this time the land grant of Congress had yielded little to the company but under the new management, the land policy of the company was changed and changed in such a way that it became necessary for the government to start suit against the company because of violations of the grant to again bring the land into the government domain. It is to these things we now turn our attention.
A. The Lease to the Southern Pacific.
In May, 1885, a plan for the amalgamation of the Oregon and California Company and the Central Pacific Railroad Company was proposed. "It provided for an exchange of securities as follows: Bonds of new company, bearing three per cent for first two years and five per cent thereafter, in exchange of Oregon and California first mortgage bonds, in the proportion of $1000 of former for each $1000 of latter (new first mortgage bonds at rate of $30,000 per mile being issued in exchange for old firsts at $20,000 per mile and old seconds at $10,000 per mile); one share Central Pacific stock for each two shares Oregon and California preferred, of an assessment of $4.00 per share; and one share of Central Pacific stock for each four shares common stock, on payment of an assessment of $3.00 per share."[1]
In June the following year, the Southern Pacific made a somewhat similar offer. Both these plans, however, were turned down.
The reorganization after the appointing of Richard Koehler as receiver had not yet taken place, but by an agreement made in March, 1887, the first mortgage bonds of the company were exchanged "for 110 per cent in new 5 per cent 40 year gold bonds, bondholders receiving per $1000 bond,"[2] and the second mortgage bonds were retired entirely. By the close of the year the reorganization was complete and the receiver was discharged June 15, 1888.[3]
In the meantime an agreement had been made with the Southern Pacific Company (July 1, 1887). The earnings up to seven per cent on preferred stock and six per cent on common stock were to go to the Oregon and California Company. Any surplus above this would go to the Southern Pacific Company. The Southern Pacific, of course, was to keep up the property and to make whatever extensions they saw fit. When they did take control, one of the first things they did was to complete the road from Ashland to the California line, a distance of about twenty-six miles.
The years immediately following the assumption of control by the Southern Pacific did not show a great deal of gain in the earnings of the company, but the road became an integral part of the Southern Pacific system with which the Southern Pacific could not well dispense.
B. The Oregon and California Land Grant Cases.
We have noted the fact that prior to 1890 the railroad company had neither patented nor sold a great deal of land. There were during this time patented about 323,184. 68 acres. The reason for the non-patenting of the land was very evident. The Department of the Interior had misinterpreted the Act of June 25, 1866, granting land to the company and had withdrawn the land from the Public Domain. The land was not salable, so of what value would it be to the railroad company to patent this land and thereafter pay taxes upon it? As long as the land remained set aside for them they could get it any time they wished, hence the delay in patenting the land was to evade taxes.
In regard to the sale of the land, the railroad consistently violated the terms of the grant. But since, as we have mentioned before, the land prior to 1890 was wanted mainly by settlers, they had little opportunity to make the wholesale violations that were made after that date when the government land had been sold and the forests of the middle west had disappeared.
When the Southern Pacific took control, the first thing they did was to systematize the land department. Timber cruisers were sent out and estimates were made on the value of the land. The company changed the form of deed in 1891 from that of a "grant, bargain and sale" to a "quit claim" deed.
In 1901 the Southern Pacific Company became merged into the Harriman lines and hence Harriman came into control of the land grant of the Oregon and California Company. The first thing he did was to withdraw all the land from sale under the pretense that the books of the company were in such shape that they must be examined and until this was done they would refuse to sell any of the land. The San Francisco fire aided them in this respect, for the company actually did lose in this fire many valuable records. But these at best were only pretenses, for Harriman, in a speech in 1907, admitted that this would be the permanent policy of the railroad.
The people of Oregon were not unaware of what was taking place, for in Febraury, 1907, the Legislature of Oregon adopted a memorial urging upon Congress the necessity of passing such legislation as would force the railroad company to obey the terms of the grant. The issuance of patents was from that time on prohibited and the government began the investigation of the company's actions in regard to the land grant. For nearly a year the Department of Justice investigated and finally made a report to Congress revealing the flagrant violations of the Act, whereupon Congress passed an Act authorizing the Attorney General to commence suit against the company to recover all of the unsold land remaining in the grant.
The outcome of the case was that the land grant was forfeited by the railroad and returned to the United States. The case was a sensational one. Clearly the railroad had violated the terms of the grant. They had neither limited the price of the land to $2.50 per acre nor sold it in small lots, yet for all that for eight years the case was in the courts. Never before has so much testimony been presented to any court as was presented to the Supreme Court in 1915—seventeen volumes of testimony!
The grounds upon which the railroad sought to hold its rights were that Congress had not the right to enact the restrictive clause of April 10, 1869, which limited the sales price of the land to $2.50 per acre. In addition to this, they claimed that the government had known what was going on all the time and had even given its sanction to some of their dealings and that, admitting they had violated the terms of the grant and the government's right to legislate, the contracts were not enforceable. Both the Circuit Court and the Supreme Court, however, held that the contracts were enforceable.
The question was finally settled by an Act of Congress passed June 9, 1916. By this Act the title of the unsold land reverted to Congress, but granted to the railroad company for the land thus appropriated $2.50 an acre, the sum allowed them in the Act of Congress, April 10, 1869. The Secretary of Interior was to determine the amount of land already patented by the company and that to which they would rightfully have claim and pay the company from the proceeds of the sales of the land the $2.50 per acre. Thus Congress fulfilled the wishes of the preceding Congress that had passed the Act that the railroad should have $2.50 an acre for the land and $2.50 an acre only.
CONCLUSION
We have now followed the history of the company for more than a half century. We have watched it grow from the amoebaic state of the preliminary survey through all its stages, until its union with the more complete systems, becoming an indispensable part of their lines. But what next? Now has come the motor bus and the motor truck to compete for the carrying trade of this region. Pavement now extends over an extensive portion of the territory traversed by the railroad. So effective has been the competition of the busses that the railroads have been forced to curtail the number of trains run. Does it mean that the railroad is soon to become a thing of the past, now that it has extended its arms in all directions? This, time alone will tell. It may be that to the trucks will be given the short haul trade and to the railroads will go the long distance freight. But as to future developments, we can only guess; for occurrences as they actually happen, we must wait.
APPENDIX A
Bibliography
This bibliography does not pretend to be a complete one. To give a complete descriptive bibliography, no less than fifty pages would be required. It is merely the purpose of this bibliography to point out the main secondary works and the main source materials. Where the source material has an author the name is given. But much of this material consists of legislative acts and documents. The acts and documents run into the hundreds. For the legislative acts we merely give a blanket reference. For convenience, these acts may be most conveniently found in the transcript of evidence in the case O. and C. R. R. vs. U. S. The documentary material such as letters, contracts, mortgages, etc., is most all given there, so for any reference to these we refer to Vol. 17 of the transcript of evidence O. and C. R. R. vs. U. S. which is the index. This index is not a cross index but merely a topical index of the documents contained volume by volume.
Other references are given below.
Secondary:
Bancroft—Oregon, Vol. II. Carey—History of Oregon. Donaldson—Public Domain—Short Sketch of History of the Railroad Land. Haney—A Congressional History of Railvoays in U. S . to 1850. A Congressional History of Railvoays in U. S. 1850-1887. Himes and Lang—History of the Willamette Valley* Lyman—History of Oregon, Vol. IV . pages 225-276. Oregonian's Handbook, 1894. Schafer—History of Pacific Northwest. Scott—History of Portland.
Source Material:
Barry, Col. A . C . — Report on Preliminary Survey. Clarke, S. A .— The Oregon Central Railroad, Quarterly of the Oregon Historical Society, v. 7 . Elliott, S. G . — Report of Preliminary Survey, Multnomah County Library. Fenton, W. D . — Political History of Oregon, 1865-1876- Quarterly of the Oregon Historical Society, v. 3, pp. 41. Gaston, Joseph—Oregon Central Railroad. Quarterly of the Oregon Historical Society, v. 3, pp. 315-26 . Genesis of the Oregon Railvoay System. Quarterly of the Oregon Historical Society, v. 7, pp. 105-32 . —Portland, Its History and Builders. —Centennial History of Oregon. Inside History of the Oregon Central Railroad Company. Found in O.and C.R,R.vs. U.S., Vol.X. Holladay vs. Elliott— - Suit for Dissolution of Partnership. —Final Decision. Oregon Reports, Vol. 8. —Report of Referee. FoundinO.and C.R.R.vs. U.S. — Deposition of £• G. Elliott. J . C . Moreland, Referee. In Oregon Hist. Soc. Collection. —Documentary History of Oregon Central Railroad. Prepared as an exhibit in the case Holladay vs. Elliott by S. G . Elliott. Contains all documents in relation to the history of the Company. Mitchell—Letter to Judge Deady Asking Support. In Oregon Historical Society Collection. See Appendix.
Newspapers—The newspapers of the period are a fruitful source of information. In them are found letters from the people, notices by the company, protests against OREGON AND CALIFORNIA RADLROAD 343 actions of the company, etc. It is possible by means of these to set the dates on certain occurrences that would otherwise be hard to place. The newspapers used for this have been: The Oregonian The Oregon Sentinel The Oregon Statesman The State Journal Law Suits—In the study of any railroad, lawsuits must needs be a great source of information. The courts are full of litigation by the company. The most important cases to be noted, however, are: Holladay vs. Elliott Newby vs. The Oregon Central. Oregon and California Railroad vs. the U. S . Just a word should be added as to the use of lawsuits. Decisions usually give the main points in the history of the case, but to stop with this would be to stop before the most prolific source has been reached. The trans- cript of evidence contains the statement of the witnesses and the exhibits are usually certified copies of the docu- ments. Thus the most of the documents concerning this company are found in the transcript of evidence of the case O. and C R. R. vs. U. S., and not the decisions. In this case eighteen volumes were necessary to print the evidence and the largest part of the material consists in documents. Oregon Legislature—Beginning with 1864 and going up to 1868, both the Laws and the Journals contain ma- terial upon the railroad. Unfortunately, the University library does not have all the Journals, but the missing onesmaybefoundinO.andC.R.R. vs. U.S. Oregon and California—Reports of Henry Villard to Stockholders. Miscellaneous documents may be found in the Oregon Historical Society Collection. O. and C. R. R. vs. U. S. This case contains practically every document relating to the history of the road. All the government acts relating to the history of the company, all the acts of the legislature of Oregon, the minutes of both the East and West Side companies and pamphlets that would otherwise be out of print are found here. In addition we have the testimony of some who were connected with the railroad, such as J. Gaston. Then finally, we have the contracts, deeds, mortgages, reprint of lawsuits and official letters, making in itself a complete documentary history of the company. Vol. 17 is the index to the set.
Poor's Manual of Railroads—This has been used extensively year by year in compiling the statistics as to earnings. The manual contains material that is not otherwise available.
Townsend, B. D.—Report to the Department of Justice, February, 1908. Conveniently found in the Oregonian, Feb. 24, 1908.
United States—Documents—Yearly, from 1864 to 1870, the Congressional Record contains references in relation to this road. All acts of Congress, however, will be conveniently found in O. and C. R. R. vs. U. S. The later acts and reports as to forfeiture will be found in the same place.
Villard—Memoirs of Henry Villard, Vol. II . Report to Stockholders. Oregon Historical Society Collection.
APPENDIX B
Due to the fact that Gaston has written so voluminously upon the History of Oregon and especially upon railroads and has stated that the Elliott survey stopped at Jacksonville, and because Bancroft and other historians writing upon the subject have followed Gaston's version, it is perhaps fitting that we should give some consideration to the reasons for holding the position that Elliott did complete his survey and for placing that survey prior to the Barry survey.
The report, however, contains no date. It was made to the California and Oregon Railroad Company. The report states that the company was organized Dec. 1, 1863, and incorporated June 29, 1865. Obviously, then, OREGON AND CALIFORNIA RAILROAD 345 it could not have been printed until after June 29, 1865. He refers to the act of the Oregon Legislature in 1864 granting aid as being last year, so we can establish the date of the survey as being 1865. The Barry survey, however, was made in 1864 and was printed for the session of Congress 1864-5, so the ques- tion immediately arises, did Elliott complete a survey to the Columbia river or did he merely make use of the Barry survey? Undoubtedly some of the facts which he utilizes for his report were taken from the pamphlet by Gaston on the Wealth and Resources of Oregon which was appended to the Barry survey. This would indicate that for the latter part of his report, Elliott did depend upon Barry's report. On the other hand, contemporary accounts show that he did not depend upon Barry for the survey itself. The Oregon Statesman for October 26, 1863, contained the following item: "The survey of the route for the pro- posed railroad is nearly completed. The operations of the surveying party have been under the superintendence of Mr. S . G . Ellott, an engineer competent to ascertain and detail all the conditions of the route as is sufficiently evidenced by the adoption of his survey of the Pacific Railroad route over the Sierra Nevada Mountains. He is, besides this, fully endorsed by the California press. It would not be necessary to state these facts, only that our people may be satisfied that Mr. Elliott is not a speculative adventurer. His statements we believe to be entitled to credence and the candid consideration of our people." Then follows in brief the estimates of the cost of construction as given in Elliott's report. On Jan. 30, 1864, in an editorial entitled "Jackson- ville and the Telegraph," in the Oregon Intelligencer we find the following: "A railroad line from Marysville to Portland has been surveyed and located through our town." Barry did not complete his survey until October, 1864, so this could not have been the Barry survey. 346 JOHN TILSON GANOE • m«1 «tt* 1 f|I
Then again, going directly to Barry's report, we find: "It is claimed by some of the citizens of Eugene City, that by surveying a line through the Applegate Pass, I have avoided their town and the whole of the upper end of the Willamette valley, all of which they claim resulted from getting into the wrong pass. Whatever may have been the effect of doing so, I certainly had no such object in view. It was neither my desire nor purpose to run to or avoid any particular town, but to discover the nearest and best route for the projected road. Having last year surveyed the line through the Pass Creek Pass and down the Willamette through Eugene to Corvallis, and having all the field notes and maps of that survey in my possession, I could have no object in going over the same ground again, especially when the friends of a new route were clamoring for an examination of its claims."
Again, further along, he says, "Mr. Elliott recommended the line passing through the Pass Creek Pass (and at that time he was unaware of the existence of the Applegate Pass) down the Willamette river, through Eugene City, crossing the Willamette at Corvallis, then in nearly a direct line through Albany, Salem, Oregon City and on to Portland."
We see then that in October, 1863, Elliott had practically completed his survey. By Jan. 30, 1864, the survey had been completed to Portland. Barry did not complete his until October, 1864, so it must have been someone else. Barry recognized the fact in his survey that Elliott had advocated the line on the East side of the river and since during the intervening years between the time when Elliott withdrew from the party and the time he published his report to the California and Oregon Railroad Company, there is no record of Elliott making a survey, we can only conclude that the report of Elliott, published in 1865, is on the preliminary survey completed
in 1863, and thus precedes the Barry survey. APPENDIX C
State of Oregon, Secretary's Office
Dear Sir: I have no personal knowledge of filing of papers in this office by Mr. Gaston, on the sixth of Octo- ber, 1866, more than this: that about the date named (Mr. Gaston says it was the 6th) he presented me an envelope which he said contained articles of incorpora- tion of the Oregon Central Railroad Co., on which en- velope I marked the date in pencil, (Mr. Gaston says I marked the document instead of the envelope, but I have not seen the paper since, hence my impressions are that I marked the envelope). I did not examine the contents did not formally file the paper. Mr. Gaston wished to retain it in his possession for a short while, but for leg- islative purposes desired to say it had been presented for filing, to which I could see no objection. I had forgotten the foregoing circumstances altogether until about the middle of November 1866,Hon.J.S.Smith made application to see the articles of incorporation of the Oregon Central Railroad Co., and I turned to the usual depository for such documents, but not until after I had made a thorough search did it occur to me that the articles referred to were not in my possession.
Your obedient servant SAMUEL C. MAY Sec. of State.
Hon. Addison C. Gibbs, Portland Oregon.
State of Oregon Multnomah County I, B. L . Norden, County Clerk of said county and state do hereby certify upon the instrument endorsed "Articles of Incorporation of Oregon Central Railroad Company" filed November 23, 1866, by H. C . Coulson, clerk, and upon the reverse side of said filing there appears in pen- cil these words, "October 6, 1866" erased with ink, as nearly as possible like unto the pencil entry and ink erasure on the third line above this line. In testimony whereof I have hereunto set my hand and official seal, this ninth day of January A. D. 1869. B. L. NORDEN, (L. S.)
County Clerk, Multnomah Co., Oregon. APPENDIX D
Salem, Oregon.
My Dear Sir: Can you in justice to yourself write a few lines confidentially to David Powell, urging upon him the propriety of his sustaining the East Side Company in the matter of the United States Land Grant? If you can—you will confer a lasting favor upon myself—and the Company I represent. As to the rightfulness of this course—by the present Legislature I do not see how there can be two opinions—the facts are simply these eight men on the twenty-sixth of September 1866 agree to associate themselves together and form a corporation under the name of "The Oregon Central Railroad Co." They drew up articles in triplicate and signed them and handed them to Mr. Gaston, who is a Notary—with the understanding that he attach his certificate and seal and file them.— Mr. Gaston, instead of filing them, goes before the Legislature and its Railroad Committee, and represents to them as did all the gentlemen named in the articles, that those gentlmen had formed a corporation under that name. The committee acting upon this made a report (see Journal of last sessions Page 256) wherein they stated that the gentlemen named in the articles had formed a corporation under the name and style of "The Oregon Central Railroad Co." the gentlemen named therein supposing all the while they were incorporated, the fact being however, that Gaston never attached his certificates or filed its papers until over a month after the Legislature adjourned. The Legislature on the tenth of October, 1866 passed a joint resolution designating "The Oregon C. R. R. Co., as the Company that should take the Land Grant, supposing all the while that the eight gentlemen before named were duly Incorporated; After the Legislature adjourned, Mr. Gaston, without the knowledge, or consent of the gentlemen who had signed the papers—obtained the signatures to the same articles as additional corporates the following names: M. M. Melvin, Geo. L. Woods, R. R. Thompson, J. C. Ainsworth, S. G. Reid, Jno. McCrachen, and C. H. Lewis and J. Gaston and on the sixteenth day of November he, Gaston, attaches his certificate and seal (This too after his commission as Notary had expired, and the twenty-first day of November over four weeks after the adjournment of the Legislature he filed the Articles with the Secretary of State—But not only so, before filing them, he enters into a secret agreement by which one of their number to wit: Gaston, is to subscribe $2,500,000 of the stock and for their special benefit this stock to be unassessable—On the seventeenth day of November, four days before the filing of these Articles which are the Articles under which the West Side Company claim their rights, three of the gentlemen who first signed the articles; that is J. S. Smith, E. N. Cooke, and I. R. Moores, ascertaining that Gaston had deceived them and had not filed the articles as originally intended, formed a new corporation and took the same name and duly filed them on that day, which of course was the first company incorporated under that name. At that date they did not know what had become of the original papers. On the twenty-second day of April, 1867, no stock having been subscribed, or directors elected, in either of the two companies before designated, a third company was formed and papers on that day duly filed. This corporation was composed principally of the men who first signed the original papers. They also assumed the same name. They had then discovered the frauds that had been practiced upon them and this was the reason they formed the new company—leaving out the names that had been obtained to the first papers after the adjournment of the Legislature, and without their knowledge or consent, with the exception of Gov. Woods who was taken in;— The second corporation before referred to was abandoned because it and the Capital Stock was too small. The last Corporation Incorporated April 22, 1867, immediately had one-half its stock subscribed and on that day elected the Board of Directors, in May following Gaston subscribing his $2,500,000 stocks in the first named Company and proceeds to elect Directors himself— Now the two companies present themselves to this Legislature and ask to be designated as the company to take the Grant—The West Side claims that they have rights by virtue of the Acts of the last Legislature, at least equitable rights that ought to be respected. The East Side Company denies this and insists that they both stand before the Legislature in the same situation, neither of them being in existence at the time of the acts of the last Legislature, that neither of them has ever been designated, or if any equity exists in favor of any company, it exists in favor of that Company that is composed of 350 JOHN TDLSON GANOE the men whom the Legislature supposed were Incorpor- ated at Last Session, and to whom, as a Company they intended to give the grant. But suppose it was claimed that although no company was in existence at the time the resolution was adopted that as a matter of law the grant would vest in the Company first Incorporated under the name designated—which was that of Nov. 17, 1866, which is not the West Side Company, and suppose that Company never proceeded to subscribe its stock or elect directors, but was permitted to lapse, and was aban- doned—the result most unquestionably would be even in that view, that the Land grant would revert into the hands of the Legislature and consequently the West Side Company has no claim to it. The truth of the business is no Company was in existence and consequently no com- pany could be designated in my judgment, and now the question before the Legislature should be:—Which of these two corporations are the most meritorious? Which one is pursuing the route indicated in the Act of Congress, making its grant? namely from Portland "Southeasterly through the Willamette, Umpqua, and Rogue River Val- leys" which is the most central road, and most nearly in accordance with the intentions of the Congress of the United States? Which is the most likely to go and build the road? Should it be given to the East Side Company to enable it to meet its contracts with capitalists with whom they have already contracted and who are already on the ground pushing forward its work? Or should it be given to the West Side and take all the chances of delay and of final failure in securing outside capital without which no road can be built ? Judge, I hope you will pardon me for consuming so much of your valuable time in this matter, and my,only excuse is a deep-seated conviction of my mind that every consideration of right and equity would call for action in favor of the East Side Company, and feeling as I do that any other course at this critical moment in the history of our State, would be damaging to her best interests in the highest degree—should you regard this matter in the same light that I do and should you feel at liberty to indi- cate your views in a letter written to Mr. Powell, or to myself, to be shown to him or to any others you might designate, I shall be much gratified. Should you decline to do so, of course it shall not disturb our present friendly relations and you will pardon the request.—The Senate OREGON AND CALIFORNIA RAILROAD 351 at present is at a deadlock eleven to eleven, but I am strongly of the opinion that the East Side will finally suc- ceed in getting a resolution through giving the grant to the road that first builds and stocks fifty miles. Yours confidentially, and with high regard J. H. MITCHELL Hon. M. P. Deady, Portland, Oregon. Office of Oregon Central Railroad Co. Salem, Oct. 16 —1868. Dear Sir :- Yours of the 13th inst received and contents noted, and for which I am sincerely grateful. I showed it to Mr. Powell with strict injunction that he was to consider it strictly a confidential communication and I think it had a good effect. Judge Stout has been a friend to our enter- prise from the first, as must be evident to all from the course he has taken in the senate. As to Nez., He has constantly stated that he was not in the fight. He has been over but twice since the Legislature has been in session and then only to remain a day. Mr. Holladay however understands him to be not unfriendly to East Side. Well tomorrow, (Saturday) the great fight will, I presume, take place in the Senate. Both armies of Lob- byists have been resting upon their arms for the past week, but so near to each other that the skirmishing of the picket guards could be occasionally seen by a close observer. Judge, I may possibly be mistaken as to the result, but if I was as sure of $10,000 as I am that we will beat them, I would feel safe on money matters for the next few months. I believe that we will succeed and that too in getting a square designation in favor of East Side. Still while this is the way I figure it, there is, it is true, frequently a 'slip between the cup and the lip' I believe we ought to succeed for I regard that organization on the West Side as one born in fraud, cradled in infamy, and one that ought in Justice as well, to all honest men in Multnomah, Washington and Yamhill Counties, as to the people of the whole State, be perpetually damned— Yours in haste
J. H. MITCHELL APPENDIX E
Individual Vote on S. J. R. No. 16, 1868
SENATE
FOR Names County Bayley Benton Brown ~ Marion Cochran _ Lane Crawford Linn Cyrus Linn Dribblesby Grant Ford Umatilla Hendershott Union Miller Marion Miller Jackson Powell Multnomah Stout Multnomah Thomp son CI ackamas Trevitt Wasco AGAINST Names County Adams Yamhill Cornelius ....Washington, Columbia, Clatsop and Tillamook. Herman Douglass, Coos & Curry Holtzclaw Josephine Huston Lane Ison Baker Pershbaker..Douglas, Coos & Curry Vote House, 1868, H. J. R. 866 FOR Alexander Linn Alexander Benton Bellinger Benton Beers Baker Bryant Linn Butler Wasco Cox Josephine Crooks Linn D avenport . Marion Denny Marion Garret Clackamas Gray Grant Gilfrey Lane White Jackson Johnson Linn Kirk Umatilla Louden Jackson Lichtenthaler Marion Minto _ Marion Powell Multnomah Rinehart „.._ . Union Smith Jackson Stites __ Linn Simpson Marion Trullinger Clackamas Tandy Lane Winston Speaker Whitaker. Lane AGAINST Applegate Douglas Benson Baker and Union Brown Yamhill Burnett Yamhill Davis Multnomah Chapman Multnomah Flook Douglas Gazley Douglas Grant Polk Horter Clatsop & Tillamook Jackson Washington Neal Grant Pendegast Coos and Curry Ryan Wasco Scoggins Multnomah Townsend Polk Taylor Washington Waymire Polk