of the company were exchanged "for 110 per cent in new 5 per cent 40 year gold bonds, bondholders receiving per $1000 bond,"[1] 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.[2]
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 The Department of the Interior had misinterpreted the Act of June 25, 1866, granting land to the company and had withdrawn the land from the Public Domain.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
