The sun. [volume] (New York [N.Y.]) 1833-1916, 1876-03-14
THE PACIFTC RAILROAD.
How TO Secure the Government Against Loss
on Account Of the subnidy bonds.

WASHINGTON, March 13.-On motion Of
Mr.. Lawrence OF Ohio, the House Judiciary
Committee were recently instructed to inquire
and report what legislation Is necessary to SO
cure the Government against loss on account Of
the subsidy bonds issued TO the various Pacific
railroad companies. The subject was referred
to n subcommittee, consisting Of Messrs. Knott
and Lawrence, who to-day submitted TO the full
committee their report, EN- bodvlng a number Of
important recommendations. The report, which
was prepared 10y Judge Lawrence, and make 100
pages OF manuscript, goes into an elaborate ex-
animation Of the relations which exist between
the Pacific railroads aud the Government. and
shows. by detailed statistics aud computations,
that after applying all the means now provided
by law for the reimbursement OF the interest
advances, there will be a deficiency OF at least
Sl5O,OOOOOO in principal and interest when the
subsidy bonds mature. This result ia arrived al
without allowing the Government to calculate
compound interest on its advances. II Ia argued
that the companies VIII not ne able TO pay this
sum IN addition TO their first mortgage indebt-
eduess to private parties, and the belief is ex-
pressed that they do not expect to. The sub
committee, therefore, recommend the passage
of bill, Of which the main features are as fol-
lows:
Flr,t-The Government is to retain in the Treasury
All money which Ia or may be que 10 the companies and
apply It 70 their indebtedness 70 the United States
S's sc COMPANY I pay TO ae COX
the Treasury shah prescribe, and which Invested at
interest VIII the maturity Of the subsidy bonds,
create q fund sufficient to pay the principal.
Third-lt requires the creation Of similar fund TO
paye the maturity OF the subsidy bonds the amount Of
the Interest not then renhur'ei ny services aud by
the ave per cent Of the net earnings now required to
be paid Into the Treasury
Fourth-It prohibits each company from making any
dividends while II 10 u default OF complying with any
Of these requirements for seini.annual payments.
Fifth-lt gives the Government right OF action to
recover oil money due or to become due ana TO take
possession OF any or ~ operate ON any road In default
The bill also, among other things, requires tho
Secretary Of the Treasury to report to Congress
what may be reasonable rates Tor Government
transportation. The amounts OF semi-annuat
payments to create a fund for the payment Of
interest are to be prescribed from time to time,
according to the amounts realized from the s
per cent. of net earnings, and the retention OF
charges for Government business. The report
SAYS, the proposed bill " adds nothing to the OBJ
legation OF the com panies IA To the payment Of
Interest. IL leaves the question open whether
the companies should pay the interest a. IL ac-
crues, so that, II the Government at any time
desires to ask the Supreme Court TO review the
recent decision, this can be done" Prominent
members OF the committee are Of opinion that
the main recommendations Of this report will
be adopted aud reported to the House.