New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1873-11-20
RAILBAY SCHEMES AT WASHING TON.


We have already warned the country that
enormous schemes for obtaining money from
the public treasury have been prepared by
various railway and other companies, and that
Congress will be exposed this Winter to the
assaults of one of the most powerful lobbies
ever seen at Washington. Spectators in
Southern State bonds and in Northern railway
securities have combined their forces. The
time is certainly not proptious for their opera
tons, but they are likely to attempt some
thing, and it is important that the public
should meet them at the outset with reso-
Lutte opposition. We have before us the details
of q plan conceived some time ago by the
Northern Pacific and the Texas and Pacific
Railway Companies for obtaining govern
ment guarantee on their bonds. A petition
was prepared bearing the signatures of
the officers of both companies, and the
Endorsement of Jay Cooke a. Co., to be pre-
sented to Congress but the Credit Moblier
explosion occurred before the document could
be used, and al it was evident that it had no
chance of favorable consideration while the
moral revulsion lasted, it was quietly laid
aside. We have recently seen it stated that
the Northern Pacific Company wishes at the
next session to surrender the remainder of its
land grant in exchange for the Endorsement of
the Government on its bonds. The scheme of
last year, however, offers no such exchange as
that 1t asks for q guarantee without any
equivalent. 1t proposes that the Government
shall guarantee interest at six per cent,
gold, on the bonds of these two COM
panies to the extent of $4,000 per mile
for all the road yet to be built and
equipped.-of the Texas and Pacific west of
Longyiew and Texarkana, andi of the
Northern Pacific west of the Missouri River.
This amounts to more t6anl3, 900 miles of road,
representing $120,000,000 of bonds and $7,200,-
600 year interest, the redemption of the
principal to be provided for by the creation Of
"a sinking fund of one per cent gold, payable
semi-annually. to be set apart and applied
"to the redemption of the bonds at par in
"gold by lot"
This scheme was the consequence of the
failure of the attempt of the Northern Pacific
Railway Company to negotiate loan in
Europe. The agents of the German capital
lists, in their reports of the condition and
prospects of the road, showed pretty clearly
that there was no probability of the Company
paying the interest on its bonds for some
time after the completion of the work. The
country must be developed, and commerce
created, before there would be any surplus to
meet the demands of the bondholders. The
United States then would have to pay the
default, and it needs no great acuteness to
understand that the default would never be
made good by the Company. The sinking
fund in such q state of affairs would be but
broken reed to lean upon.
To understand the true character of this pro-
posal it should be understood that the North
ern Pacific Road is built entirely at the public
expense. The contributions of the stockhOld-
ers are 80 insignificant in amount that they
may as well be left out of the calculation.
The Government makes a grant OF land, upon
the security of which the Company borrows
money enough to pay the entire cost of con-
struction, and the estimate is that when this
loan has been repaid by the sale of the land
there will be q large quantity OF valuable land
remaining to be divided among the stockhold-
ers. These fortunate persons will then be the
owners of q railroad 1000 miles long and a
princely estate, for which they will have paid
little or nothing, and run no great pecuniary
risk. 1t would seem that the Government had
done enough to encourage" the building of
a.railroad when it had given the builders land