234 LESLIE M. SCOTT
lis and Yaquina and the wagon road company, east of Albany, running through Eastern Oregon, neither of which, however, was an asset of the railroad then or later. Yet the prospectus said : "The proceeds of sales from the land grant constitute a sinking fund for the purchase or final payment of the bonds. .... The land grant alone, embracing, as it does, over 900,000 acres of most valuable selected lands, including all tide and marsh lands in Benton County, will be worth, on the comple- tion of the road, more than the entire amount of the mortgage, thus practically leaving the entire railroad and equipment and the steamships and steamboats and other craft with enormous earning capacity, free from mortgage."
The only assets of the company, at that time, were the grant of tide lands and ten miles of unfinished railroad west of Cor- vallis, that cost probably $75,000. The Company never re- ceived a land grant from Congress. Hogg and his associates were understood to hold options for purchase of the two wagon road grants. Even if these lands had secured the bonds, their value was very uncertain, and at best, small compared with the sum borrowed.
Further, the prospectus estimated an enormous revenue from freight and passenger traffic. The net earnings, after operating expenses, of the first 130 miles of railroad were estimated "conservatively" at $1,062,000 a year, or nearly six times the annual interest. The actual earnings never verified these predictions in slightest degree. The promoters not only over- estimated the volume of traffic of the Willamette Valley but grossly exaggerated the part of that traffic which would come to them. The Willamette Valley already had two big lines of railroad, south from Portland, and a third was then build- ing. Besides, river steamboats controlled a large traffic by way of Portland. Moreover, the port of Yaquina was inade- quate for large ships, because its entrance then had a maximum depth at high tide of only 14 or 15 feet, according to the season of the year. (Reports of U. S. Engineers.) Time proved
