At the close of the year the company had 59 locomotives, 39 passenger, mail, and baggage cars, and 2,145 freight cars.

The company has built 14 stock cars and 8 cabooses at its shops in Springfield, Mo., and has sufficient accommodations for the repairing of all rolling-stock.

SAINT LOUIS, IRON MOUNTAIN, AND SOUTHERN RAILWAY COMPANY.

This road has been aided through the States of Missouri and Arkansas by a grant of 1,386,384 acres of land.

The operations during the year 1880 developed greater progress than in any year of its existence.

Inspection of the property of this company was made by the civil engineer of this office in September, 1881, being the first one made by an officer of this bureau.

The present company was formed in 1874 by the consolidation of the Saint Louis and Iron Mountain; the Arkansas Branch; the Cairo and Fulton, and the Cairo, Arkansas and Texas Railroads.

The original gauge of the road was 5 feet, but was changed to the standard gauge of 4 feet 8 inches on June 29, 1879.

The gross earnings of the road for 1880 were $6,265,597.30, being an increase over the previous year of $972,986.03. Operating expenses amounted to $4,075,226.37, or 65 per cent. of the gross earnings.

The company reports that this exceptionally large expenditure was the result of the policy adopted to put the road in first-class order as rapidly as possible.

The following statement shows the financial condition of the company on December 31, 1880:

The equipment of the road on December 31, 1880, consisted of 137 locomotives, 90 passenger, baggage, mail, and express cars, 3,983 freight and caboose cars, and 8 miscellaneous cars.

The freight traffic of the road consists largely of iron-ore and cotton. A large and increasing Texas passenger business is also being done.

MISSOURI, KANSAS AND TEXAS RAILWAY.

The date of incorporation of this company was September 20, 1865. It has been consolidated with the Sabette and Sedalia Railway Company, the Tebo and Neosho Railroad Company, and the Neosho Valley and Holden Railway Company.

The entire road has lost its individuality and is now operated by the Missouri Pacific Railway Company as its "Kansas and Texas Division." One hundred and eighty-three and two-tenths miles have been aided, through the State of Kansas, by a grant of 397,643 acres of land.

The earnings and expenses of the road for the fiscal years ending June 30, 1880 and 1881, were as follows:

DECISIONS OF UNITED STATES COURTS.

The Court of Claims has during its last term decided several cases in which the rights of the Pacific railroads, under the original acts and the act of May 7, 1878, were involved.

A case of interest is that of the Union Pacific Railway Company vs. the United States (No. 12,380), in which the company, among other things, claimed full compensation for carrying the mails over that portion of the Kansas Pacific Road west of the 394th mile-post, for which the company received no subsidy of bonds. Although this suit related. especially to the unsubsidized portion of the Kansas Pacific Railroad, it had a direct bearing on the question of whether the leased lines of the Pacific railroads, which were unsubsidized, should receive full compensation in money for all services performed by them for the government. The company claimed, further, that the Secretary of the Treasury had no right to withhold more than one-half compensation for services performed by the Kansas Pacific Railroad, it being contended, however, by the government that under the act of March 3, 1873, and the act of May 7, 1878, the Secretary had authority to withhold all compensation due either the Central or Union Pacific Railroad Company, whether such compensation was earned over leased, unsubsidized or subsidized lines.

Chief Justice Drake, in delivering the opinion of the court in this mat ter, said:

To this petition the defendants demur, and the demurrer raises the question whether, upon the facts set forth in the petition, the claimant has any right to recover.

This question arises, first, as to the 394 miles for which subsidy bonds were issued, and it is contended, on behalf of the defendants, that, notwithstanding the above-cited provision of the act of 1864, declaring that only one-half of the compensation for the services rendered to the government by the road should be required to be applied to the payment of those bonds, there is yet a right in the government to withhold payment of the other half.

In our opinion there is no just grounds for this position. The right of the govern ment to withhold any of the money earned by the company for services rendered to the government, for the purpose of ultimately applying it to the payment of the bonds, rests not upon any general principle of law, but upon statute; and when the statute, after requiring all of that money to be applied, is changed so as to require "only onehalf," it is a clear authority for the payment of the other half to the company. So far, then, as concerns the claim of the one-half of the compensation for carrying the mails over the 394 miles, the claimant appears entitled to recover.

As to the $19,180.25 earned for carrying the mails over the 244 miles, it is claimed on behalf of the defendants that the government having paid interest on the bonds, which the company ought to have paid and was bound to reimburse, it should rightfully be permitted to hold that amount for reimbursement, without regard for the question of how far the lien of the mortgage created by the issue of the bonds should extend.

It is claimed that because the Union Pacific, the Kansas Pacific, and the Denver Pacific Companies have been consolidated, and so the Kansas Pacific Company and its road have become a part of the consolidated company, therefore the compensation earned on the former road of the Kansas Pacific Company became after the consolidation subject to section 2 of the act of May 6, 1878 (20 Stat. L., 56, ch. 96), which is as follows:

"That the whole amount of compensation which may from time to time be due to said several companies respectively for services rendered for the government shall be retained by the United States, one-half thereof to be presently applied to the liquidation of the interest paid and to be paid by the United States upon the bonds so issued by it as aforesaid to each of said corporations severally, and the other half to be turned into the sinking fund hereinafter provided for the uses therein mentioned."

We are unable to perceive how this section can have any bearing on this case for the following reasons:

1. That act nowhere refers in any way to the Kansas Pacific Railway.

2. The "several companies" referred to in that section cannot be considered to be any other than the companies to which the act in its terms applies.

3. The only companies intended to be affected by the act were manifestly the Union Pacific and the Central Pacific.

4. The bonds referred to in that section are plainly those which had been issued to those two companies and no other.

It seems to us clear that the mere perusal of the act must lead to those conclusions, and they are re-enforced by the fact that the act was passed nearly two years before the consolidation of the roads took place. It is therefore not to be presumed to apply to any conditions produced by such consolidation.

This view is strengthened by the consideration that by the 16th section of the act of 1864, such a consolidation was expressly authorized, and Congress, with the act be fore it, made no provision in the act of 1878 looking to the not improbable formation of such consolidation.

If that body intended in that event to change the previously-defined relations towards the government of any road which might thereafter become consolidated with any other of the roads it would surely have enacted its will in that regard.

It did not enact anything on the subject, and we are therefore led to the conclusion that section 2 of the act of 1878 was intended to apply only to the Union Pacific and Central Pacific roads as they then stood, and to their respective liabilities to the gov ernment based on the bonds issued to them respectively by the government.

We are led to the further conclusion that when the Kansas Pacific became consolidated with the Union Pacific the pre-existing legal relations of the road of the former company to the government, as to compensation for services performed on it for the government, remained unchanged; and that whatever compensation might after the consolidation be earned on the road from Kansas City to Denver must be disposed of just as it would be if no consolidation had taken place.

The conclusion from the whole case presented by the petition is that the claimant is entitled to recover one-half of the compensation earned by the transportation of the

mails over the 394 miles for which subsidy bonds were issued, and the whole of the compensation earned in that way on the remaining 244 miles.

In Appendix 12 will be found the full text of the opinion.

In No. 12,515, Court of Claims, the Union Pacific Railroad Company brought suit for compensation in addition to that allowed by the Postmaster-General for carrying the mails, on the ground that by section 6 of the act of 1862, the railroad company was entitled to receive from the government compensation equal to the amount paid by private parties, for the same kind of service, alleging that the company's express business was the same kind of service performed for individuals as the mail service performed for the government. The court, Nott, J., delivering the opinion, says:

We do not understand the act of 1862 either to make a contract for all prospective services, or to bind the government to pay precisely the same rates which are paid by private parties for the same kind of service. Its language is:

"SEC. 6. * That the grants aforesaid are made upon condition that said company shall pay said bonds at maturity, and shall keep said railroad and telegraph line in repair and use, and shall all times transmit dispatches over said telegraph line, and transport mails, troops, and munitions of war, supplies and public stores upon said railroad for the government, whenever required to do so by any department thereof, and that the government shall at all times have the preference in the use of the same for all the purposes aforesaid (at fair and reasonable rates of compensation, not to exceed the amounts paid by private parties for the same kind of service); and all compensation for services rendered for the government shall be applied to the payment of said bonds and interest until the whole amount is fully paid"

Obviously and really, the section means, we think, that the company shall transport the government's mails, munitions, troops, &c., whenever required so to do, and that the government at all times shall have the preference over private parties; but that the transportation in all cases shall be done at fair and reasonable rates, which in no case (of preference or otherwise) shall exceed the rates paid by any private party for the same kind of service, while in all cases, even where the ordinary rates are fair and reasonable per se, the government shall have the benefit of those exceptional reductions of rate which railroads frequently make, sometimes as a matter of policy and sometimes as a matter of favor.

Another suit was brought by the Central Branch Union Pacific, which was similar to the first suit cited by me.

I also respectfully call your attention to the case of Thomas Wardell, appellant, vs. the Union Pacific Railroad Company et al., recently decided by the Supreme Court, Mr. Justice Field delivering the opinion, in which the legality of the contract made by the officers of the Union Pacific Railroad Company, by which certain parties were permitted to mine coal from land of the Union Pacific Railroad company, was passed upon. The court says that

The scheme disclosed by this agreement has no feature which relieves it of its frandulent character; it was a fraudulent proceeding on the part of the directors and contractors who devised and carried it into execution, not only against the company, but also against the government, which had largely contributed to its aid by the loan of bonds and by the grant of lands.

The court before this conclusion says

Hence all arrangements by directors of a railroad company to secure an undue advantage to themselves at its expense, by the formation of a new company as an anxiliary to the original one, with an understanding that they, or some of them, shall take stock in it, and then that valuable contracts shall be given to it, in the profits of which they, as stockholders in the new company, are to share, are so many unlawful devices to enrich themselves to the detriment of the stockholders and creditors of the original company, and will be condemned whenever brought before the courts for consideration. In Appendix 11 will be found the full text of the opinion.

LEGISLATIVE RECOMMENDATIONS.

It is respectfully suggested that section 4 of the act of May 7, 1878, amending the act entitled "An act to aid in the construction of a rail

road and telegraph line from the Missouri River to the Pacific Ocean and to secure to the government the use of same for postal, military, and other purposes," be so amended as to embrace the subsidized portion of the Kansas division of the Union Pacific Railway, formerly the Kansas Pacific Railway, within the operations of said act requiring the establishment of sinking funds and the payment of "25 per cent. of net earnings," and that the annual requirement shall be a sum not less than $300,000.

I repeat, with approval, the recommendation of my predecessor in his report for 1880, that

Sufficient appropriation be made to enable all land-grant companies which have covenanted to transport troops and supplies free of toll or other charge to be paid 50 per cent. of their ordinary charge for government transportation, on the condition that if this amount is accepted, it be in full of all demands and claims upon the government for such services.

In addition to this, I would recommend that Congress consider the question whether provision should not be made to establish permanently, or for a stated period, the rate of compensation to be paid by the gov ernment to the railroads mentioned.

After due consideration of the subject, I have reached the conclusion that 50 per cent. of the tariff, or ordinary rate of the companies, would be a compensation just to the railroads and the government, and proper for permanent application.

THE PERSONNEL AND EXPENSE OF THE BUREAU.

The following-named persons were employés of this office on June 30, 1881:

Theophilus French, auditor.

F. B. Pickerill, bookkeeper.

W. M. Thompson, assistant bookkeeper

Henry Blackstone, engineer..

Miss E. W. Rogers, clerk.

Miss Kate Schmidt, copyist..

A. S. Seely, messenger..

Thomas Hassard, (temporary) draughtsman.
E. J. Lockwood, (temporary) copyist...

Miss M: L. Barnard, (temporary) copyist...

Henry S. Leonard, (temporary) messenger.

On this day, November 1, 1881, the personnel is as follows:

Joseph K. McCammon, commissioner..

F. B. Pickerill, bookkeeper

W. M. Thompson, assistant bookkeeper

Henry Blackstone, engineer..

Luther W. Hickork, clerk

Miss Kate Schmidt, copyist.

A. S. Seely, messenger.

Thomas Hassard, (temporary) draughtsman.
E. M. Hardin, (temporary) copyist....
James S. Phillips, (temporary) copyist...

Annual salary.

Of the appropriations for this office for the fiscal year ending June 30, 1881, amounting to $15,700, the following sums have been expended, viz: Salaries, $12,897.21; traveling and incidental expenses, $2,199.07; in all, amounting to $15,096.28.

The appropriations for the current fiscal year ending June 30, 1882, are as follows: "Salaries, office of the commissioner of railroads," for commissioner, $4,500; bookkeeper, $2,400; assistant bookkeeper, $2,000; railroad engineer, $2,500; one clerk, $1,400; one copyist, $900; one