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
- ↑ Poor's Manual, 1886.
