I think that--and what I had in mind was that if I could show that the persons who were the purchasers of this stock in the Tacoma Land Co. were the same persons who were the Puget Sound Co.and Mr. Kerr says he can not furnish me with that data-it would show not only what the Puget Sound Co. had been doing, but would show a continuity of that transaction on down through the Tacoma Land Co. My point on the Tacoma Land Co. is this: That it was a paper company; it had really no assets. It was incorporated for a million dollars. Then these people, whose names we do not know, come along and for $220,000 take 49 per cent of the stock of the Tacoma Land Co. The Northern Pacific contributed 12,000 acres of land from its grant to the Tacoma Land Co. It likewise turns over this 1,600 acres that had been donated to the Northern Pacific. Now, there are 12,000 acres gone entirely from the Northern Pacific land grant for the purpose that Congress had in mind when it made the grant; and what did the Northern Pacific get out of it? I can not see that it received anything. The CHAIRMAN. They got dividends, did they not? Mr. McGOWAN. Only to the extent of the dividends that were paid on the 51 per cent. But they did not get dividends on the 49 per cent, because they were gone. Mr. KERR. They got traffic from a city of 125,000 people. Senator KENDRICK. They seem to have gotten $220,000. Mr. WINTER. I want to get that straight now. That was a loan, and they repaid it? Senator KENDRICK. That is a point of mystery with me. Mr. WINTER. We did not follow that quite to its conclusion. Mr. HILL. I thought Mr. Kerr said they borrowed that money and paid it back. Mr. KERR. That is correct. Mr. WINTER. That went into the treasury of the Tacoma Land Co. as the result of the sale of 49 per cent of the stock? Mr. KERR. Correct. Mr. WINTER. Then there was a straight loan made by the Tacoma Co. to the railroad company, and which was afterwards repaid to the Tacoma Co. The CHAIRMAN. When that was repaid the Northern Pacific owned 51 per cent of the loan, which it repaid. What I want to know is what is the vice of the Northern Pacific in availing itself of the organization of a subsidiary to handle its land? Senator KENDRICK. And paying 49 per cent of the value to this company for acting as agent. Is not that about the effect of it? The CHAIRMAN. No; I don't think so. Senator KENDRICK. There is just one point here that I want to see if I can get clear. If they actually were to repay the $220,000, if the Northern Pacific had to repay that, then what did it get for its donation of lands-that 12,000 acres of the land grant-other than 51 per cent of the stock? Mr. McGOWAN. It did not get anything, Senator. Mr. DRIVER. It got 51 per cent of $220,000, did it not? Mr. McGowan. It got 51 per cent of $220,000, for which it had been required to put up 12,000 acres on the western terminus of the road, which undoubtedly was, in the eyes of the persons who were buying this stock, one of the best speculative transactions of the day. The CHAIRMAN. It got dividends on the sale of that land. Mr. HILL. I understand that one point you are making is that the Northern Pacific had no authority to donate or to exchange 12,000 acres of land for stock in this company. In other words, they were confined under the provisions of the land grant act to dispose of this land in a certain way, and this was not one of the ways! Mr. MCGOWAN. Surely. What was the quid pro quo? What did the Northern Pacific get for the 12,000 acres? Nothing. The CHAIRMAN. They organized an agency to handle the land. Now, is there anything improper in that? That is the first question. As to what the agent did is another question. The committee will stand adjourned until to-morrow morning at 10.30. (Mr. McGowan submitted the following letters:) (Executive committee records, p. 5, box 48; St. Paul) THIRD MEETING OF THE EXECUTIVE COMMITTEE OF THE LAKE SUPERIOR & PUGET SOUND CO. HELD JUNE 9, 1870 The executive committee met pursuant to a call from the president at the company's office, No. 120 Broadway, New York. Present, Messrs. Canfield, Barney, Cooke, Billings, Smith, Goodwin. The following resolution was then presented and, on motion of Mr. Cooke, was unanimously adopted: "Whereas the Congress of the United States has under date of May 31, 1870, passed a resolution increasing the land grant of the Northern Pacific Railroad on the Pacific coast and elsewhere; therefore, Resolved, That it is deemed for the interest of the Lake Superior & Puget Sound Co., as soon as practicable, to secure the control of the principal points upon Puget Sound and the Columbia River, and hereafter, as the surveys of the Northern Pacific Railroad progress, other points in Washington Territory, Oregon, Idaho, Montana, and Dakota by locating and purchasing when it can be done on reasonable terms, such lands as may be valuable for town sites or other purposes, as may be deemed advisable by_the_prudential committee. And also to locate timber and other lands having large prospective value in the vicinity of the road. “Resolved, That the president of the Lake Superior & Puget Sound Co. be, and he is hereby, authorized in connection with such members of the executive committee as he may designate to act with him, to take such measures without delay as may be proper and advisable to carry into effect the foregoing resolution." This resolution was subsequently presented by the president of this committee to the president of the prudential committee which was then in session. On the same day I returned this resolution, bearing the concurrence of the prudential committee, and accompanied by the following resolution of that body: "Resolved, That the president instruct General Sprague, our agent, now on the Pacific coast, to enter at the earliest period practicable such of the sections of public land subject to entry in the immediate vicinity of Bellingham Bay, Port Townsend, Port Discovery Bay, Seattle, Commencement Bay, and on Fidalgo Island in Washington Territory, as in his judgment may be for the interest of the company. Also in like manner timber land in said Territory, designated by even numbers, which are heavily timbered and favorably located for cutting and transporting the lumber thereon to market. Also to enter or purchase any other lands in said Territory which may be designated by the committee of the Northern Pacific Railroad Co, which has been appointed to visit the Pacific coast for the purpose of locating the western terminus of its road, etc." This was concurred in. Adjourned without day. SAML. WILKESON, Secretary. (Executive committee records, Lake Superior & Puget Sound Co., p. 8, box 48; St. Paul) MEETING OF JULY 8, 1870 Present, Canfield, Billings, Goodwin, Harbough, Cooke, and King. Resolved, That the president be directed to execute on behalf of this company these articles of agreement in four parts between the Northern Pacific Railroad Co., the Lake Superior & M.ssissippi River Railroad Co., the Lake Superior & Puget Sound Co., and the Western Land Association; also to execute the contracts contemplated by the above and that the president be authorized to select in behalf of this company the lands and right of way and station grounds referred to in the same. THE AGREEMENT Whereas in a certain supplemental agreement between the Northern Pacific Railroad Co. and Jay Cooke & Co., dated January 1, 1870, certain covenants were made which by reference to the same will appear at length, and whereas the Western Land Association is desirous of complying with the terms of said agreement, and is also desirous of securing for its property at Duluth and Thomson the advantages that must result from the building and operating the said railroad; and Whereas the Northern Pacific Railroad Co. desires to obtain certain rights of way and depot and other grounds, the property of the Western Land Association; and Whereas the Lake Superior & Puget Sound Co. is desirous of securing certan. stock of the Western Land Association and whereas the Lake Superior & Mississippi Railroad Co. are desirous of securing upon equitable terms the advantages of the trade of the Northern Pacific Railroad Co. over their line from Thomson to Duluth; therefore this agreement of four parts: First. It is agreed that the Northern Pacific Railroad Co. shall so connect their road with the road of the Lake Superior & Mississippi Railroad Co. at or near The Dalles of the St. Louis River as to open direct communication by rail with the town of Duluth and thus maintain such connection as to enable that town to be one of its principal points of trade and transshipment on Lake Superior, and shall enter into running arrangements with the Lake Superior & Mississippi Railroad Co. on terms that shall be just and equitable to accomplish that object, and said Northern Pacific Railroad Co. shall make their first connection east from their point of intersection with the Lake Superior & Mississippi Railroad Co. by way of the line of the said last-mentioned company over Rice's or Minnesota Point, and that it will not build any other road so as to form a connection running eastward of the Lake Superior & Mississippi Railroad north of Wyoming previous to the completion of its road to the Missouri River. Second. The Western Land Association agrees to double its stock, making a total of 4,000 shares, 2,000 shares of which is to be delivered to the Lake Superior & Puget Sound Co. when a contract is made and executed between the Northern Pacific Railroad Co. and the Lake Superior & Mississippi Railroad Co. for running over their line as herein provided, and a contract entered into with the Western Land Association to carry out the provisions of this agreement and upon the payment of $120,000 cash by the Lake Superior & Puget Sound Co. made as hereinafter provided, $20,000 of which shall be divided equally between the 2,000 shares belonging to the original shareholders, and the 2,000 shares belonging to the Lake Superior & Puget Sound Co. and $100,000 shall be deposited in the treasury of the Western Land Association, to be invested as directed by the board; also it will at the same time execute by good and valid conveyances title to such lands as it controls at or near the junction of the Northern Pacific Railroad and the Lake Superior & Mississippi Railroad near The Dalles of the St. Louis River, as may be sufficient for tops, depots, stations, and similar buildings used for railroad purposes, free f all charge, said lands to be selected for these purposes by the engineer or ther authorized officer of the two roads, and will give free of charge right of Way over any lands it controls at Duluth or on Minnesota or Rices Point or beween Duluth and the Mississippi River on the line of the Northern Pacific Railroad, and also that the board of directors of the Western Land Association shall be increased by the addition of two members to be named by the Lake Superior & Puget Sound Co. The Western Land Association further agrees to furnish a schedule of its real estate and other assets to the Lake Superior & Puget Sound Co. Third. The Lake Superior & Puget Sound Co. will pay the Western Land Association $120,000 cash for the above recited 2,000 shares of stock upon their issue and delivery as above, said stock thereupon to be divided among the several stockholders of the Lake Superior & Puget Sound Co. in proportion to their respective interests. Fourth. The Lake Superior & Mississippi Railroad Co. agree to give free of charge to the Northern Pacific Railroad Co. such lands as the chief engineer of both parties may deem sufficient for its depot purposes from the lands that they possess at Duluth unappropriated for their own terminal facilities, excepting the land northeastward of the breakwater (it being understood that their unappropriated land is sufficient for the aforesaid purposes) and also the right of way over any of their lands for the extension of their road eastward over Minnesota or Rices Point. Also so much of their lands west of The Dalles as are found necessary by said engineers for right of way for their main track, depot purposes, shops, and sidings. It being agreed that proper arrangements shall be made between the Lake Superior & Mississippi Railroad Co. and the Northern Pacific Railroad Co. for the use of the road of the party first named from The Dalles to or through Duluth, or for the sale of a part thereof sufficient for one or more tracks, when the same may become necessary for the business of the Northern Pacific Railroad Co. Fifth. Whatever donations have been or may be made of property with the object of securing the location of the Northern Pacific Railroad to or through Duluth or are covered by the agreement of December 29, 1869, shall accrue to the Western Land Association as hereby enlarged. Sixth. These resolutions to be accepted by the board of directors of the four companies in the preamble named, and proper papers to secure all the within covenants to be simultaneously executed. Seventh. Questions that may arise as to the true intent and meaning of this agreement will be referred to arbitrators in the usual manner, one of which shall be chosen by the Norther Pacific Railroad Co. and the Lake Superior & Puget Sound Co. and one by the Lake Superior & Mississippi Railroad Co. and the Western Land Association, and if they fail to agree, a third to be chosen by the two, and a decision of a majority shall be final and binding on all the parties. In witness whereof all the parties have hereunto set their hands and corporate seal, at the city of New York, this 9th day of July, 1870. Expenditures Paid for 7,517.04 acres of land___ Interest Total_____ April 1, 1870, due on credit sales (with interest at 10 per cent till paid)–– Cash in hands of agent Cash in hands of treasurer_ $106, 874. 13 20, 348. 41 9, 851.60 137, 074. 14 15,000.00 152, 074. 14 $26, 114. 17 35, 824. 31 Total expenditures and assets‒‒‒‒‒‒ 187, 898.45 In addition to the 7,517 acres already paid for the Western Land Association has right to purchase 83 acres at Fond du Lac at $5 per acre, and as much land as is desirable for town sites at Moose Lake and Kittle River at $5 per acre. Adjourned sine die. SAMUEL WILKESON, Secretary. (Executive committee records, Lake Superior & Puget Sound Co., p. 28, box 48) On motion of Mr. Billings it was Resolved, That the vice president and secretary be, and are hereby, instructed to execute and deliver to R. R. Thomson, trustee of the Northern Pacific Railroad Co., a deed for the nominal consideration of $1 of all the lands of this company situated, lying, and being in township 20, range 2 north, township 20, range 3 north, township 21, range 2 north, township 21, range 3 north, in the county of Pierce, Territory of Washington, being all the lands which the Lake Superior & Puget Sound Co., owns in Pierce County, Washington Territory, in and around the town site of Tacoma. Provided, Nevertheless, that simultaneously with the delivery of said deed the said Northern Pacific Railroad Co. shall execute and deliver to this company a contract to pay over to the Lake Superior & Puget Sound Co., whenever and so soon as sales of said lands are made and moneys realized therefrom, one-third in amount of the money so realized from the sales of said land; and Provided further, That the Northern Pacific Railroad Co. shall agree in said contract that the lands that have heretofore been applied for in the State of Minnesota and Territory of Dakota, necessary to perfect the town sites of the Lake Superior & Puget Sound Co., shall be sold and conveyed to said last named company as soon and as fast as the Northern Pacific Railroad Co. acquires title from the United States, the said Lake Superior & Puget Sound Co. paying therefore the prices fixed for said lands for farming purposes. not exceeding $10 an acre. (Box 46, Bk. 1-letter) NEW YORK, July 9, 1870. JAY COOKE, Esq., DEAR SIR: I inclose you the contracts between the Northern Pacific Railroad Co., Lake Superior & Puget Sound, Lake Superior & Mississippi River Railroad, and Western Land Association, signed by the two former. Please have them executed by the latter and return one to me. The Lake Superior & Puget Sound Co. have no corporate seal. As soon as it has one I will have it affixed and exchange copies with you. Very truly yours, THOS. H. CANFIELD, President. |