The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1878-03-16
Tn. Two Pacific Railroad Bills.

| the interest on those bonds, when Is pald
semi-annually by the Treasury, is not pay
able by the roads until the principal ma
lures The roads will, therefore, be enor-
mously in debt to the government at the
expiration of the thirty years. The follow
| ing fl lures exhibit the total of principal and
| interest at the end of the period
To the Urion Pacific Railroad Company,
| Add lhcreto thirty years interest ut SIX
per cont. '''o-''-'
Principal and interest duo at maturity $40 262 233
| To the Central anu Western
| Pacic Railroad companies. S27,S53 6SO
| Add thereto thirty years in
tercst ut SIX Ter cent....... oo, LULA
Principal aud interest duo at maturity H. $685. 904
Total for both roads. S154, 25s 1877
BY the charter of the companies the gov
eminent is entitled to retain one-half OF the
compensation which may be due them for
transportation Of mails, &C., and five per
cent of their net earnings but the latter have
been computed by the roads on such prin-
ciple that repayments from this source
amount to nothing. No intelligent esti-
mate makes the amount which will be
due to the government at the ma
turity of the bonds less than one
hundred and twenty million dollars,
after all deductions If the government
held q first mortgage upon the roads it
might be safe even with so colossal debt
due it from the companies, since the two
roads will probably be worth one hundred
and twenty million dollars in 1898, which
is the average date Of the maturity of the
bonds. But, unfortunately, the govern
ment does not hold the first lien upon the
Pacific roads, 1t had this right by the original
charter, passed in 1862, but in 1864 Congress
passed supplementary act allowing the
companies to issue their own bonds and guar
antee them by first mortgage on their prop
erty, thereby putting the claim Of the gov
The amount Of the first mortgage bonds is
about equal to that of the subsidy bonds
issued to the companies by the government.
A claim of one hundred and twenty million
dollars against them, secured only by q
second mortgage, might be worth very little
in the year 1898, because during the last
ten years previous to that date the roads
might be SO managed that their sale under
foreclosure of the first mortgage would
bring little more than would suffice for pay
ing off the claims having priority over those
of the United States 1t is not surprising,
therefore, that there is feeling of alarm
| respecting the safety of the government
claim.
| The professed aim of both of the Senate
bills is to quiet this alarm by exacting
security for the government. One of these
bills is from the judiciary Committee Of the
Senate, reported by Senator Thurman the
other from the Railroad Committee, re-
ported by Senator Stanley Matthews. The
country has no good reason for preferring
one Of these bills to the other, except so
far as one of them may be better adapted
than the other for attaining the professed
object of both, which is to protect the gov
eminent against stupendous loss Our
present impression is in favor of the bill OF
the Judiciary Committee, as looking more to
the interest Of the government and being
more efficient. 1t is prima facie presump-
ton in favor of this bill that the Pacific rail-
roads strenuously oppose it and advocate it's
rival AS the roads have been resisting the
years, litigating the ground inch by inch,
they cannot be much wronged by suppo-
sition that their object is still to feather
their own nests and gain every possible adj
vantage over the government But, motives
apart, it is evident, on examination of their
| 1ot fhaM 90 l.
is great deal more favorable to the roads
than the Thurman bill. Mr.. Matthews bill
explicitly provides that the principal of the
bonds, which is due at the end of the thirty
years, shall not be paid then, but have
an extension for long period beyond. It
provides, indeed, for sinking fund suffi-
cient to liquidate the accrued interest at the
end of the thirty years and to make q very
slight reduction Of the rincipal-namely,
from $55, 1872 to $50, 412, $50. If the
Matthews bill will really do this, if it will
really extinguish the total interest, amount.
ing to 500, 165, 945 for the whole period, it is
not bad bill, and would put the govern.
ment in condition of comparative security.
But it is nevertheless proposal to release
the Pacific roads from their original
engagement. BY their charter they
are bound to discharge their whole
debt to the government, principal and
interest, at the end of the thirty years.
They wish to be let off with paying the in.
terest by the time the subsidy bonds ma.
ture and ask an additional twenty-five
years for gradual discharge of the princi-
pal. To pass this bill would be great deal
better than to leave the subject in its pres
ent unsatisfactory and perilous state; but
the Thurman bill seems more efficient and
to have been framed more entirely in the
interest of the government.
There is but little force in the objections
made against it by the advocates of its rival.