The weekly clarion. [volume] (Jackson, Miss.) 1863-1882, 1878-04-17
TIE PACIFIC RAILROAD FUNDING BILL
REMARKS OF
Hon. n WTON BOOTH
OF CALIFORNIA,
In THE SENATE OF THE UNITED STATES,
Wednesday, april 3, 1873.

/ the Missouri river 10 the L icifi,. Ocean anC
10 secure 10 the Government tile use of tn,
same for postal. military, and other pur-
| poses" approved july l. 1862 and also T., a |.
/ ter and amend thea OF Congress approved
July 2, 1864, in amendment OF said first
| named act -
Mr.. Booth said: By the acts of 1862 aud
1864 grants ot land aud loans of the credit
| OF the United States were made to the
Union aud Central Pacific Railroad Oom-
/ panieS for the purpose OF building "A rail
road from the Missouri riEer TO the Pa
eff: Ocean, and the right to alter, amend,
or r-pcal was made absolute as iU could
| be in Xprrss words.
| These loans were 20 be repaid a. follows
| Five per cent uf the net earnings of the
road and one-half their accounts against
| the Government Tor trdnspo tatiOh were to
| be applied from year to year aud the resi-
| due was To be paid at the maturity OF the
| bonds. Estimating this yearly payment
| by he average business of the roads since
| iheir com uletion, their indebtedness 10 rhe
! Government a. shown bV the Senator from
| Indiana Mr.. NJ Donald will amount in
/ the year 1900 To 1922 300 600. Adj 10 that
| the principal OF the first-mortgage bonds,
| 500 00O, 900. aud we have the sum of Sl77,-
| O0O,000, for which the security is two thou-
| sand miles OF railroad, or at the rate of $751;
| 500 per mile.
! No one who has investigated this quas-
| ton will claim for moment that this prop
/ ertY is adequate or reasonable security for
| that amount of debt. The officers OF the
| road themselves admit that iG is not. and
make that admission claim for settle
ment in the nature of compromise. This
admission. and the facts on which il was
based, are utterly at variance with the r. p
!, sentati0ns Ofthe companies as To the cost
of this line of road. Their reports claim
that there are 100000, 900 OF paid up stock !:
that is that S9J,0O0,00O OF actual capital has
been paid into the treasures of these COM
pauies aud paid out in the construction of
their roads. If that statement be true, the
cost of construction would be ab)ut as toll
lows:
Amount of the first mortgage 55,000.000
Amount of Government bonds $4,000 900
Amount of land mortgage .-. 20,000000
Capital stock paid up. ... ...-. 90.0O0.0O0
Making in all ..... 100000, 900
for tire construction OF these two thousand
miles of road, fou--fifths of the distance be
ing over country as favorable to the con-
stIuction of a railroad as any on this CONT
neut; and then this line of road, which
they allege has cost $4,000 600, with a con-
stantly growing business, with a constant
ly increasing value, in twenty-five wears is
not an adequate security for SLY 100000.
There must Ue some huge mistake upon
one side of this question, and it Is not diff
cult to see upon which side the mistake is
made.
The bonds of the Government were the
basis OF the credit upon which the compa-
MES were enabled to place their first-mo TT
gage bonds. These two classes of bonds,
emitting all mention of the land bonds,
amount to $52 600 per mile to the Union
Pacific and $4,000 per mile to the Central
Pacific, and they not only built the road,
but left large margin of profit aggrega-
ting millions OF dollars. The $36,000000
of stock in the Union Pacific and the SOL
100000 of stock in the Central Pacific do not
represent money paid in. II il had been
paid in, that with the land bonds alone
would have built the road. This $90000,000
of stock claiming dividends, standing be-
tween The com paneS and their obligations
10 the Government, does not represent one
dollar nor the phantom of a dollar nor the
semblance of phantom. l. it represents
anything, it is simply an arbitrary profit
upon fraudulent contracts. The assumption
that it is actual capital il Il bare, naked as
sumption, without 4 fg-leaf covering of
fact
This is the character of the investment
which the Senator from Ohio on my right
/ Mr. MatthewSI says would not have been
made except upon the faith that Congress
would not alter in any particular an act
which it reserved to alter in every particu-
lar! Over this, with the glamor OF his gc-
MUS. he attem pts to throw the sanctity of
vested rights! That bad system of build
ing railroads for the sake of the profits to
be made out of their construction by swell
ing the cost of construction To the largest
possible amount, leaving the rNads them
DuruGUcd
an interior ring, found its elimination in
the construction OF these railroads.
On this condition OF facts as to these two
roads, so muniticently endowed, earning
now annually more than SIG 100000 OF net
profits, with xD9,00O0O0 of stock which does
not represent one dollar of actual capital
while this Government is annually paying
So. 200 900 for the benefit of these roads and
OF that fictitious capital, that S9J,OOOOOO of
stock claiming the right to absorb the whole
Of fto a.. Inn
the Government without adequate security
for the $l22, 100000 which is dle and TO be
come due. these TWO bills are reported for our
consideration covering the same ground but
differing widely in details aud fundamen-
tally in principle.
One notable difference in detail is that the
bill of the Railroad Committee proposes to
take the , per cent. of net earnings and the
half transportation account, which should
he paid annually To the Government, and
place it ia q sinking fund for the benefit of
the railroads upon WHICH the compound in
terest is To be estimated annually at the rate
of per cent. 1t is not t. be invested; Il
computation is simply to be made, and they
are to receive credit for that. That is. we
are to allow to these railroads per cent.
compound interest on our own money, l
wonder if they could not be induced to al
low us to keep our own money by paying
them simple interest! Such principle eN
tended upon payments of this nature for
one hundred years would bankrupt this
Government; limited to twenty-five years
it simply amounts to gift to these compa-
nies of $4,000 600.
Mr.. Thurman. Thirty-five million dol
lars.
Mr. Booth. Thirty-five millions! Then
my calculation was wrong. Maeaulay.
believe, relates-I am sorry l cannot quote
his language accuFa5ely-that when Lord
Give was accused of rapacity he answered
that when he remembered the princes who
had been at his feet, the treasures that were
open TO him, his boundless opportunities
for plumber, he only stood astonished at his
own moderation!
The fundamental difference between these
bills. however, is that the bill of the Judi
ciaFy Committee asserts the power of Con-
gress, and proposes To enact law; the bill
of the Railroad COmmtttse denies the pow
er of Congress, and proposes to nsgptfate.
The bill OF the Com mittee on the Judiciary,
if enacted, will require the companies to
pay a SUN which together with the sums
they are now required to pay shall not ex-
coed one quarter of their net profits into
sinking fund, the accumulatiOnS of which
shall belong to the companies but held in
trust for the payment of their debts. This
is the main purpose OF the bill, and the very
height and front of its offending. Ii any
legislative body in this country should
enact by general law that all corporations
under its jurisdiction and over which it held
and reserved control should set apart one
quarter of its profits 10 secure creditors
and protect itself from bankruptcy, L
can scarcely imagine the character of
mind which would not recognize this
as wise, proper, and constitutional legisla-
ton. This provision, so wise, so honest, so
moderate, applied to these companies, con-
fessedly under the jurisdiction of Congress,
panies that have been so manifcently
endowed, is denounced with the very vehe-
fnence of invective. Its pronounced vio-
lation not only of the Constitution, but of
those moral instincts and principles of nat
ural justice which qpderlie society and make
civilization possible.
Mr.. President, there is something in this
more than natural, if philosophy could only
find it ont.
Sir, the fact that the Government Is cred