USA > Colorado > History of the State of Colorado, Volume II > Part 33
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Respecting the prior right of way in the Arkansas Cañon under the decree of the Supreme court, the Rio Grande might take possession of the narrow part of the gorge by paying the Santa Fé the cost of its constructed line. Three days were allowed for the complete restoration of the road and property to the lessee. But Judge Usher asked for a stay of proceedings until the receivership question could be passed upon, which was granted. On the 3d of July, Justice Miller decided that the State court possessed authority to appoint a receiver, and that Mr. Risley had been legally appointed. The suit for foreclosure of the mortgage and for a receiver had been brought before Bowen by Mr. L. H. Meyer of New York, representing some of the bondholders. The Santa Fé entered a motion to discharge the receiver, which was overruled.
A few days later, after elaborate argument on both sides, the receiver was discharged. On the 14th the court ordered all pro- ceedings stopped in the cañon pending examination and report by a commission of engineers. Mr. Risley was ordered to restore the
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property within two days, and it was done. This order having been obeyed, Judge Usher made formal announcement of the fact to the court, and immediately thereafter filed a motion for an order to restrain the Santa Fe from operating the road, and for the appointment of a receiver to take charge and conduct its affairs, until the Rio Grande could be heard on its motion to annul the lease.
While these peaceful proceedings were being had in the temple of justice, fortifications were being erected in the Grand Cañon. Engineer De Remer, with fifty men, had stopped the Santa Fé graders at the limit of their twenty miles, declaring " thus far and no further shalt thou go." When asked by what authority he stopped them, De Remer answered, " By the decision of the United States Supreme court and these fifty men back of me." Wild scenes of violence were being enacted at Pueblo, through the wrath of the Rio Grande men who had been discharged under the order of restitution. They attacked the Santa Fé employes wherever found ; engineers and firemen were pulled from their cabs and beaten ; threatening notices were sent to the station agents, roustabouts and brakemen ; pictured coffins, embellished with deaths' heads, daggers and cross-bones nailed upon their doors, with orders to get out or suffer the consequences. The authorities were powerless ; noisy demonstrations occurred about the station, and at times blood flowed copiously.
On the 24th Judge Hallett announced his opinion upon Judge Usher's motion for the appointment of a receiver, granting the same, and appointing Col. L. C. Ellsworth of Denver to take charge of all the property, directing him to retain W. W. Borst as General Superin- tendent. The road was to be operated by order of the court until the termination of the causes then pending. Ellsworth accepted and assumed the duties. This result gave great satisfaction to the public, but especially to the merchants. The road was surrendered without delay. Mr. S. R. Ainslee was appointed general freight agent, Herman Silver, auditor and cashier.
Matters assumed a tranquility that for months had been unknown,
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continuing until September (1879), when it was announced from Pueblo that chief engineer Robinson of the Santa Fé had received orders to commence locating a line from Pueblo to Denver. Later,-about the middle of the month,-it was reported that Jay Gould had purchased the Denver and Rio Grande, that he would at once compromise the difficulties and hasten the extension of the line by purchasing the Santa Fé grade in the cañon. That some arrangement had been made between Palmer and Gould is probable, but the Santa Fé refused to permit its execution. Nevertheless, it was announced on the 29th of September that Gould had bought one-half the stock, taking all the chances of litigation, the Gould and Palmer interests to be equally represented in the new board of directors, and funds to be supplied for extending the line to Leadville and south into New Mexico.
To determine the cost and value of the work done in the Grand Cañon, and to arrive at an equitable basis of settlement, Judge Hallett appointed Mr. A. N. Rogers of Gilpin County, George E. Gray of Cal- ifornia (the choice of the Rio Grande party), and Sooey Smith of Chicago (selected by the Atchison interest), a Board of Commissioners to advise the District and Circuit courts, whether there was room for another road, and to estimate the cost and value of the railway con- structed wholly, or in part, from Cañon City to Leadville. They com- pleted their examination and filed their report about the 20th of October, 1879. In their judgment it was entirely impracticable to con- struct two roads through the narrow part. The cost and value of the work done was estimated in detail, and on the 22d of November, this ap- parently interminable case made its reappearance in court. Judge Beck- with having retired from the side of the Santa Fé, Judge L. S. Dixon, for many years Chief-Justice of the Supreme court of Wisconsin, but then engaged in the practice of law, appeared for the first time in his place.
At the annual meeting of the Denver & Rio Grande company in Colorado Springs, November 28th, 1879, the Board of Directors chosen comprised Palmer, Bell, Gould, Russell Sage and C. F. Woerishoffer. A resolution was adopted confirming the action of the directorate in
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providing for extensions of the several lines, and especially for an imme- diate extension to Leadville, also repudiating the lease and requiring the board to prosecute the Santa Fé for damages.
About the 20th of December,'a pooling arrangement between the Union Pacific, Kansas Pacific and the Atchison, Topeka & Santa Fé was reported ; all litigation between the latter and the Rio Grande to be terminated and the narrow gauge made the distributing road for all southern traffic.
January 2d, 1880, a decision was handed down in the Grand Cañon case to the following effect : That from the mouth of the cañon to the mouth of the South Arkansas River, the Rio Grande was to take and hold the prior right of way; that it might take the roadbed of the Santa Fé in that part by paying for it at the rate determined by the commissioners; when paid for, all injunctions and restraining orders to be dissolved and set aside, and the Pueblo & Arkansas Valley company was perpetually enjoined from interfering. From the South Arkansas to Leadville, the prior right belonged to the Santa Fé, or the Pueblo & Arkansas Valley, by reason of prior location. Mr. A. N. Rogers had been appointed a commissioner to ascertain and fix the points, compute the cost, etc. If the Rio Grande parties elected to take that part of the line they must deposit within sixty days, with the Chemical National bank of New York, the sum specified in Mr. Rogers' report, when they might take possession.
After listening to the decision, Judge Usher applied to be let into possession immediately, in order that his clients might proceed at once to push their road into the great mining district of Leadville, offering to give bonds in any amount. But the court answered that they must await the report of Commissioner Rogers. Judge McCrary, who sat for Judge Hallett, decided also to make an order granting an appeal to either or both parties.
Thus the matter stood until the 2d of February, 1880, when the Supreme court at Washington gave its opinion on the application of the Rio Grande for a writ of mandamus, to compel the Circuit court in Col-
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orado to render a final decision in accordance with the mandate of the Supreme court issued at its previous term. The plea was that the Cir- cuit court had failed to obey the order to place the Rio Grande in pos- session of its prior right of way. The motion was overruled.
Almost simultaneously with this opinion, the papers were being executed in Boston for a compromise and general settlement of all ques- tions in dispute. An agreement was reached on this basis: The Rio Grande agreed not to build its contemplated line to El Paso, Texas, nor its proposed line eastward to St. Louis. The Santa Fé on its part, agreed not to build to Denver or Leadville. The Rio Grande was to complete its line to Leadville, paying for all work done in the cañon, and to retain possession of its road, the lease to be canceled and stocks exchanged; all litigation to cease. The amount to be paid for the Santa Fé roadbed was the original cost of the work, less the cost of liti- gation, and a bonus of $400,000 ; Leadville and other southern traffic over the narrow gauge to eastern points to be delivered, one-half to the Santa Fé, and the other half to the Union Pacific ; the Santa Fé to stop at Pueblo, with the right in reserve to build a line thirty-eight miles long to the coal mines on the Arkansas, where they should mine coal only for railway uses and for sale down the Arkansas Valley. The lease to be surrendered, and the receiver discharged. These negotiations having been concluded, the suits were withdrawn and the road turned over to Palmer. With funds to carry out its immediate purposes in the way of extensions, the Denver & Rio Grande resumed the regular order of business. Thus ended one of the most remarkable railway contests, of which history has any record.
The legal talent arrayed on either side, comprised the flower of the Colorado bar, with three eminent counselors from eastern cities,-Judges Usher, Beckwith and Dixon; Henry M. and Willard Teller, G. B. Reed, Thomas Macon, Charles E. Gast, Major E. L. Smith and G. G. Symes, all of whom the various intricacies and legal perplexities of this extraordinary contest kept constantly active and alert. I can recall no cause in our courts wherein so great a number of distinguished
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attorneys were engaged, or in which so many really able arguments were presented. Having witnessed most of the proceedings, I speak wholly from personal observation. Among so many finished, eloquent and powerful forensic efforts, it is difficult to decide without danger of invidious comparison, which was the most pleasing and effective. One fact was apparent to all observers, that the utmost vigilance of the court and the attorneys for the Santa Fé, was required to hold Judge Usher in place. Right or wrong, he lost no opportunity for making a point in favor of his clients, and many of his points, more than those by any other attorney, were promptly overruled. Each possessed dis- tinct characteristics peculiarly his own, whereby one might easily deter- mine who was addressing the bench without seeing the speaker, by the style and manner, use of language, etc. Personally, I formed this opinion : That the keenness, force and logical power lay with the Tellers, Reed and Macon ; the finished, elegant rhetoric which charmed by the refinement of style, and at the same time bristled with facts and ingenious handling of the issues, with Beckwith, Dixon, Smith and Gast.
To illustrate the rapidity with which the main line and its branches were constructed after the road came back to the Rio Grande com- pany, the following notes are produced from the official reports of J. A. McMurtrie, chief engineer :
Work on the extension from Alamosa to Espinola, New Mexico, was begun February 20th, 1880, and completed December 31st of that year; the line through the Grand Canon was finished to Leadville July 20th, 1880; the branch to Robinson, December 27th; to Rock Creek, near Red Cliff, in March, 1882; to Dillon, November, 1882, and to Grand Junction, December 19th, 1882 ; the branch from Del Norte to Wagon Wheel Gap, July 6th, 1883.
Mr. J. P. Mersereau was the first chief engineer of the road under Col. W. H. Greenwood, general manager. Mersereau resigned in 1872, when J. A. McMurtrie succeeded him as chief engineer, who held the position until 1884, when he became a contractor.
But the difficulty between the Rio Grande and the Santa Fé was
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by no means the only railway emeute that provoked turmoil and occupied a large share of public attention, and that of the tribunals of justice. There were others which had their part in the exciting chron- icles of this stormy period, before and after the era of completion and consolidation, to which we will now turn for such consideration as the facts may warrant.
The controversy between the Kansas Pacific and the Union Pacific companies over the pro rating arrangement* demanded by the former and strenuously resisted by the latter, prevailed until September, 1874, when Gould, Dillon, Ames, and other directors of the Union Pacific, and R. E. Carr, with T. F. Oakes, and other chiefs of the Kansas Pacific, held a conference on the 30th of that month in Denver, at which an agreement was concluded, a contract drawn and signed. At this meeting the principal matters in discussion were considered and the misunderstandings reconciled, in the interest of mutual co-operation. The beneficial effect upon every department of commerce was direct and immediate, but especially favorable to our trade with the Pacific. States, with Chicago, St. Louis and the Atlantic seaboard. The prin- cipals in this compact, to secure a legal adjustment of their differences, agreed to make up a case for submission to the courts, and the lawful adjudication of their respective rights and obligations under the several acts of Congress relating to Pacific railways; neither company to present any technical objections for purposes of delay, and both to use their best endeavors to reach an early decision. Meanwhile, the arrangements agreed upon were to be carried into effect and continued until further notice. Col. Cyrus W. Fisher was appointed superin- tendent of the Kansas Pacific and Denver Pacific roads. The time made by passenger trains between Denver and Chicago under the revised schedule was reduced to sixty hours. It is now thirty-four to thirty-six.
Jay Gould secured a controlling interest in the Union Pacific road in 1873, by the purchase of 100,000 shares of its capital stock. Sub-
* For beginning see Chapter IV, this volume.
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sequent purchases increased his holding to 200,000 shares. As the history of Mr. Gould's connection with this road had an important bearing for some years upon the course of railway traffic west of the Missouri River, and a supreme influence in our affairs, a rapid resume of that connection will be interesting. For part of the material facts, reference is had to the very complete report of the United States Railway Commission, appointed by act of Congress of March 3d, 1887.
The inception of the Kansas Pacific road lay in the organization of the Pawnee & Western Railway company which applied to Congress for a land grant. Its interests were subsequently transferred to Fremont and Hallett, who transferred in turn to the Kansas Pacific Railway company. The original corporators proposed to make the city of Leavenworth the initial point, but lack of enterprise by the cap- italists of that place, who rested secure in the belief that the road would be started from that point anyhow, caused them to decline the overtures for material aid, so the projectors went to Kansas City, where the demand was promptly accepted, and in the subsequent construction of the road, Leavenworth was sorely punished for her delinquency by being left on a distant side track.
In 1865 the name was changed to the Union Pacific, Eastern Division. The act of Congress of 1862 gave this corporation authority to construct a line from Kansas City, westwardly and form a junction with the Union Pacific on the one hundredth meridian. The original scheme contemplated a Pacific road commencing on the meridian just named, where the various corporations, starting from different points, should converge. By Section 14, of a later act, the Union Pacific itself began at a point on the western boundary of the State of Iowa, fixed by the President of the United States.
In 1862 Iowa had no railway completed within two hundred miles of the Missouri River, the only line from the North to that turbid stream being the Hannibal & St. Joe. The advantage whereby the States of Iowa and Nebraska acquired, the one the initial point, and the other the actual starting point of the Pacific Railway, was the work
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of the Iowa delegation in Congress, who secured the right to build a branch from the western boundary of their State to connect with the Pacific road about 250 miles from the starting point, and it was to have the same rights and privileges as the Kansas Pacific in that connection. Congress fixed the starting point of the Pacific road at the one hundredth meridian, or western boundary of Kansas, simply because it could not charter a railway through a State, but Nebraska being a Territory, the movement made by the Iowa people secured by appro- priate legislation the location of the main line through that Territory.
Congress willingly encouraged the proposed construction of a series of roads from the river westward. By authority of the act of July 3d, 1866, the eastern division changed its route to connect at or near Denver. The work began in 1865, and by the close of 1868, 400 miles had been put in operation. The government subsidy ended at 393 miles west of Kansas City. The remainder of its construction history up to 1870-'71, is set forth in our first volume.
According to the report of the railway commissioners, the total gross traffic of the Kansas Pacific road from 1867 to 1879 inclusive,
Amounted to $41,645,174.22
Operating expenses. 32,424,956.12
Net earnings over operating expenses, 13 years .. $9,220,218.10
But after deducting bond and interest account, and accrued interest to the government, there remained a deficit of $11,330,772.42. The road became hopelessly insolvent in 1873, and a year later went into the hands of Henry Villard and C. S. Greeley, receivers, where it remained some years.
In April, 1875, a convention of the principal directors in the Union Pacific and Kansas Pacific roads was held in Philadelphia, with a view to perfecting arrangements for the consolidation with the two main lines, of the Colorado Central, Denver Pacific and the Boulder Valley roads. The announcement of this result shortly afterward, caused a sharp advance of Kansas Pacific shares. The Union Pacific agreed to merge
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its Colorado Central into the Kansas Pacific, and in compensation was to receive $10,000,000 of consolidated stock. The old directors retired and were succeeded by Sidney Dillon, Jay Gould, James D. Smith, Oliver Ames and others, of the Union Pacific. The combination was to enjoy all the Colorado traffic, while the Kansas Pacific relinquished its demand for a pro rate, and to all New Mexican business that did not naturally strike in its direction. It was this arrangement which incited Mr. Loveland and his coadjutors to seize, hold and operate the Colorado Central road in 1876, as set forth in the succeeding chapter.
As one of the results of the embargo placed upon the trade of Colorado with the Pacific States, whence was derived our supply of domestic fruits, our merchants were compelled to endure the most out- rageous extortions and discriminations. Witness the following: The rate on fruits, by the car of 20,000 pounds from California to New York, over the Union Pacific road and its connections, was $656 ; to Chicago, $500 ; to Omaha, $425, and to Denver, $515.
The rate from California via the Central Pacific to Ogden (516 miles), was $178 per car ; from Ogden to Cheyenne, $247, and from Cheyenne to Denver (106 miles), $90, thus piling up the charges on a single car of California fruit at the point of delivery in this city, to $515. This is but a fair example of the robberies committed by the Union Pacific, a road that was built with the money of the people, taken out of the public treasury for their advantage and benefit, a large part of which, by the way, was deliberately stolen, and the road made an instrument of oppression.
The scheme of consolidation having miscarried by the resolute action of the Colorado stockholders, the business of the country settled back to the old grinding and exasperating conditions. There was no prospect of relief in any direction. At length, however, the Union Pacific, determined on crushing out both roads, the Kansas Pacific and Denver Pacific, made its plans for the extension of the Colorado Central from Longmont to Cheyenne. Then the Denver Pacific people began to comprehend the effect of such a project upon that property. It
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would not only be destroyed as an artery of commerce, but the Union Pacific, in addition to continuing the embargo against our Western trade via the Kansas Pacific, would secure and control the Colorado business in and out. The Denver Pacific was in the hands of a receiver,-D. M. Edgerton. Our merchants viewing the situation with alarm, urged a compromise on any terms the Union Pacific might demand, but it was too late. On the 27th of June, 1877, a conference was held between the commissioners of Arapahoe County, which held a million of stock in the road, and the receiver and officers of the Denver Pacific, to discover what might be done to rescue the property from destruction. The commissioners had already commenced an action in the United States court for a temporary injunction and the appointment of a receiver, and to obtain an accounting with the Kansas Pacific company on an alle- gation that a majority of the trustees of the Denver Pacific company had been committing frauds, and thus deprived the company of funds which rightly belonged to it. Among other things, they demanded that the road should be managed for its own benefit, regardless of the Kansas Pacific to which it had been tied; that reasonable freight and passenger tariffs for local and through traffic should be adopted instead of the extortions that had been practiced, and that close connections, instead of no connection at all, should be made with the Union Pacific at Chey- enne, so as to encourage and not impede communication ; that the main offices of the company be kept in Denver instead of at Kansas City ; that the earnings be applied to operating expenses, and the surplus to the payment of interest on its bonds, and finally, that the disastrous con- tentions between its managers and those of the Union Pacific be brought to an end. These demands were formulated and sent to the Kansas Pacific directors at St. Louis, and they assented to them. Edgerton went before the County Commissioners and informed them that their protocol had been accepted and all their desires conceded to be just and proper. Governor Evans, one of the trustees of the Denver Pacific bondholders, being present, did not agree to the proposition, because, in his opinion, it would not accomplish the object in view. The suit in
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court should be pushed to its conclusion. He wanted an accounting for the funds which it was alleged had been misapplied. Furthermore, if the compromise were intended to dissuade the Union Pacific from its purpose to build to Cheyenne, it would fail, because he had talked with Gould and Dillon and found them unalterably determined to build that line. The delay in coming to an agreement had exhausted their patience, and they would now force the issue. Mr. D. H. Moffat, treasurer of the Denver Pacific, however, still believing that the matter could be amicably arranged, persuaded the commissioners to agree to withdraw their suit. But it was of no avail. Gould and Dillon entered almost immediately upon the prosecution of their design, and the road was built.
In the meantime, Jerome B. Chaffee had been elected to the Senate. His first effort in the way of legislation for Colorado was a masterly arrangement of all the facts relating to the question of pro rate between the Kansas Pacific and the Union Pacific roads. When in order they were presented in a speech of great power, which not only attracted the attention of the ablest men in that body, but proved the beginning of a final settlement of the whole question. He sub- mitted facts and figures to prove that the Union Pacific road, which had been built with the funds of the government at an enormous profit to the company, instead of answering the purpose of its creation, had been made an instrument for merciless extortions, solely for the profit of its managers and principal stockholders. He demonstrated by an array of unanswerable evidence that it was being used to vex, annoy and rob the people; that it had set up a gigantic monopoly out of which by skillful manipulation and the most outrageous exactions it had made $23,000,000 in constructing the road and great profits by operating it at the expense of the public. His speech was prefaced by the following preamble and resolution :
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