Hon. Thos. Ryan,
Acting Secretary of the Interior,
Washington, D. C.

Sir:

xxxxxx In the matter of the pending application of this Company for a Right-of-way across the lands excluded from the Yosemite National Park by Act of February 7, 1905: Referring to our conversation of yesterday, wherein you intimated a preference by the Department for a flat annual compensation in lieu of one based upon receipts from the traffic and suggested that I submit an offer of such lump sum as seemed equitable, I would say I find some difficulty in arriving at such a sum. Theamount to be paid would presumably be based either upon (l) the actual value to the United States of what it is giving to us, or (2) the value to us of what we receive from the United States.

xxxxxx The length of the line across the excluded lands is a little less than fifteen miles, of which more than three miles is over previously patented lands in private holdings largely controlled by this Company. This leaves the length of the Right-of-way sought at something under twelve miles. (Even of this about one-half is covered by mineral locations made by various parties subsequent to the Act of February 7th. They are made under the Placer Law for stone quarries and lime kilns, and with a sufficiently good technical title to render it probable the Railroad Company will be obliged to pay something to extinguish these titles.) A strip of land, such as is sought, twelve miles long and one hundred feet wide contains one hundred and forty-five acres. This land could, and no doubt upon proper proof would, be sold under the mineral land laws above referred to at $2.50 per acre. The entire tract sought being thus held by the government at a valuation of $363. Rents are usually based on some percentage of the total value, but a compensation based on any reasonable percentage of this value would be so small that I presume it would not be satisfactory to the Department.

xxxxxx The value to the Railroad Company is difficult to determine. For the past three years the number of tourists annually reaching the Valley by other than private conveyances has been from four to five thousand. The law of California fixes a maximum rate of fare of ten cents per passenger per mile; therefore, if the Railroad carried all of these passengers both ways and charged the maximum rate of fare, it would receive gross from the traffic, $12,000 per year. In practice not all of these passengers would follow this route, nor would it be practicable to charge the maximum rate of fare. On the other hand, the construction of a Railroad would increase the number of passengers after the first year or two.

xxxxxx The estimated cost of twelve miles of Road affected is about $265,000. Interest on this is at five percent would be $13,250 per annum, an amount in excess of the gross revenue as estimated on present business; leaving less than nothing for cost of operating. In the Philippine Islands the Government is understood to receive one percent of the gross earnings of the new Railroad System and the Government guarantees the interest on the bonds of the Railroad.

xxxxxx One percent of the above estimated revenue would yield $120. per annum. I presume this would not be satisfactory to the Department.

xxxxxx I also call attention to the fact that the Government maintains two troops of Cavalry in the Park during about six months of each year; with their transportation this requires about two hundred horses, consuming about three hundred tons of hay and an equal amount of grain, which now sell in the Yosemite at $50. and $60. per ton respectively. At local points on this Company's line the ruling price for these commodities has been $8. and $18. Add maximum legal rate of freight of fifteen cents per ton per mile for sixty miles and this material can be delivered to the Park for $17 and $27. respectively, a saving of $33. per ton in each case, a total annual saving of $20,000. in the cost of administering the Park.

xxxxxx In view of the small value of the land to be taken, of the small gross revenue in sight and the almost certain deficit for the first few years, as well as the very considerable saving in expenses to the Government in cost of transportation as above, I suggest a small annual payment for the first three or five years -- say equal to the Government price of the land, or perhaps $500. or $600. per annum --and at the end of this period the rate to be readjusted either by the President or Secretary of thee Interior.

xxxxxx As an alternative proposition, and one which we believe to be more advantageous to both sides, we make the following offer:

xxxxxx (l) To pay an annual rental of $100. in advance.
xxxxxx (2) Within twelve months from date of the agreement to build, at our expense and at a cost not to exceed say $65,000, that portion of the wagon road recommended by the Mansfield Commission of 1899 and the Chittendon Commission of 1904 from the present western boundary of the Park to a connection with the present Road in the Yosemite Valley; such road to be built by us to conform to the requirements of the Department, to be owned and controlled by the United States Government and to be a free public highway. The construction of this road is necessary before the public, the Government or the Railroad Company can derive any benefit from the construction of the Railroad. The terminus of the Railroad at the new Park boundary is in a deep canyon distant four miles from the present Road System of the State and National Parks and only connected by a very rough saddle trail which is too poor to be safely traveled by the average tourist even on horseback. The Chittendon Commission recommended the construction of this Road by the Federal Government. Their recommendation was approved by the Department and transmitted to Congress which failed to appropriate any money. In view of the existing conditions there is no reason to anticipate  an appropriation for this work and, realizing this, the Railroad Company is prepared to enter into a contract under bond to build and deliver the complete road within twelve months from the time the Department formulates its plans. Major Chittendon estimates the road complete and macadamized to cost $20,000. per mile. Our engineers and eminent outside counsel have advised us that the climate renders macadam paving undesirable and there is absolutely no material suitable for macadamizing along the route of the road. Should our further examinations confirm this, we would expect to substitute the alternative suggested by the Chittendon Commission, (treatment of the road with crude oil which, in effect, substitutes as asphalt for a macadam surface and is more durable in that dry climate.) If the Department has no funds available for the formulation of its requirements, I believe that, in case the Department will secure the detail or Major Chittendon or some equally competent engineer, this company would undertake to furnish him necessary transportation, subsistence and assistance during his examinations.

xxxxxx There seems full authority in the Department to accept the proposition herein outlined. The Assistant Attorney General in his opinion rendered to you on May 26, 1904, advised that the Department had authority to permit the construction of this road by private parties having vested interest to be served by it. The Mansfield Commission, under Act of March 3, 1899, reported that this was the proper route for a road. The Chittendon Commission, under Act of April 28, 1904, confirmed this finding and presented. strong reasons why it was desirable that the road should be built. Congress sanctioned the Principle of the construction of the road by other than Federal Authority, when, by Act of July 18, 1892, it authorized the County of Mariposa to build this road, an authority the County has never availed itself of by reason of lack of funds. Briefly, we believe this road desirable for the public, the Government, and our own private interests. We do not believe Congress will supply the money for many years, if at all and we therefore offer, either as a part of the compensation for this Right-of-way or as an independent proposition -- the acceptance or rejection of which would materially affect the value of this Right-of-way to us -- to build a road and give it to the public without strings or conditions of any kind. If this proposition, in outline- meets with your approval, I will be glad to take up the details with you at your convenience. I am prepared at any time to furnish you any necessary evidence of the financial ability of this Company to carry out any such undertaking, if it should enter into a contract so to do.

xxxxxx Very respectfully yours,
xxxxxx (Signed) N. C. Ray
xxxxxx Chief Engineer Yosemite Valley
xxxxxx Railroad Company.