stood in the way of the United States taking the work into its
own hands. Even if this were not so, reasons of economy suggested it
were better to enlist private capital and individual enterprise in the
project. This Congress undertook to do, and the inducements held out
were such as it was believed would procure the requisite capital and
enterprise. But the purpose in presenting these inducements was to
promote the construction and operation of a work deemed essential to
the security of great public interests. Besides it is fair to infer
that Congress supposed that the services to be rendered by the road to
the Government would equal the interest to be paid. Congress well knew
that the Government bound itself to pay interest every six months and
the principal at the time the bond matured, resting satisfied with
the entire property of the Company as security for the ultimate
payment of the principal and interest.

This settled the interest question and the next one to arise was the
question as to the payment of five per cent, of the net earnings
towards the extinguishment of the Government indebtedness, as provided
for in the act of 1862, viz., "And after said road is completed, until
said bonds and interest are paid, at least five per centum of the net
earnings shall be annually applied to the payment thereof." By act of
Congress, June 22nd, 1874, the Secretary of the Treasury was directed
to require this payment, failing which, to bring suit. The Supreme
Court decided this in 1878 that the Company must pay this five per
cent and defined net earnings as what was left out of the gross
earnings after deducting all the expense of organization, operation,
or for betterments paid out of earnings.

In 1878 the so called "Thurman Act" became law, by which a sinking
fund was established looking to the extinguishing of the Company's
indebtedness to the Government. This sinking fund was to be made up of
one half the amount accruing on Government Transportation, the five
per cent of net earnings, plus enough more of the earnings to make up
in all twenty-five per cent of the total net earnings, but not to
exceed eighty-five thousand dollars per annum,--this sinking fund to
be invested by the Secretary of the Treasury in Government Bonds.

Up to 1879 the policy of the Company was to transfer all through
freight at its eastern termini, none of its equipment being allowed to
leave its own rails.

Soon after the absorption of the