New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1878-03-12
THE PACIFIC RAILROADS.
A SINKING FIND PROPOSED.


REPORT OF THE SENATE COMMIfTEK-AMOuNI OF
BONDS IssUrD-DIsPUTEs BETw ZEN THE GOVERN
NFNT AND THE ROADs--AN EQUITABLE AND BUSi-
NEss-IIKE PLAN OF SETTLEMENT
Mr. Matthews presented yesterday the report
% .ha S.rate Committee on Railroads on the
hiu i, relation to "a sinking fund for
fine Pacific Railroads. which was lntroduceu
January Il by Senator Dorsey. OF Arkansas Inc
report was accompanied by substitute t"r BIZ
Dorsey's bill. Senator Matthewsals made motion
(which was referred to COMMITTEE on PRINT
ING, to print 800 extra copies OF the blll'
and then report The sum TO be palo nS
the United states. and repaid by the racine
Roads will amount 10 y 5i, 25S, 1877 when the pohus
mature The substitute offered by the committee
proppses TO establish sinking fund which shali
have at the maturity of the bonds paid Oh
all the interest nd + 100000 of the PRINCIPAL
leaving due and unpaid about S3l,o0o,ooo' i"e
Government directors of the Union racine halHoau
report that the securities held by that company ior
aid furnished other roads amounts to $3'ooo'Ooo'
SENATOR MATTHEWS'S REPORT.
The Committee ON Railroads. to whom was
referred senate bill M. 49, bin in relation TO the IA
riac Railroads. report the same back with snbs'dut"
therefor recommending the adoption and passage Of the
latter.
The committee have given the sujcct-matter Of this
bill and substitute patient thought and careful consd
Grafton The interests involved in these measures are
great and have attracted widespread attention. Ihe
United states and the corporations concerned shoud
both strive to reach some common ground whereby
their several interests may be conserved, and their CON
FLEEING views relative thereto fairly, justly, ana
.eauitably adjusted. TO reach this ground mas
been the purpose Of the committee ana theS
hone to show that their efforts have been
-, least fairly successful Not umnindful Of the
difficulties which surround the subject considered The
committee beeve That Ihe substitute reported presents
o j,tst solution thereof
not the purpose the committee to discuss the
questions Of which affect the peculiar relations
existing between THE United States and these corpora
t,ons What Congress has the power to do touching
their relations is ninG. What is most wise TO Oe
done quite another thing. Congress has reserved 10
itself the right alter, amend or repeal the acts
under and in pursuarce Of which United States ponds
were issued to these corporations to aid in the eonStc
ton of their several roads The committee do not care
TO discuss the power Etre serve! nor to express an
opinion relative to what Congress may or may not do
Hereunder aud in pursuance thereof The case pre-
seuted to the committee 10 be OF practical
business rather than of legal construction 1t turns
anon a few facts all Of which admitted and about
which there DISPUTE.
AMOUNT Due TIE GOVERNMENT
Under the Act OF JAY 1862. and the acts amending
the same supplemental thereto the United States
advanced TO the Cca;rh Pacific Railroad Company, Of
California aud the Western Pacific Railroad Company
nOw practically cOrporaton TO aid IN the cons'ruc
ton OF the roads. III tc states bonds amounting, Ill The
aggregate 20 the sum OF S27,sJ5.6SO. The bonds ma
ture thirty years after date. and during the period
bear per interest annum The interest for the
term. therefore. VIII amount to SOL making,
with principal the maturity of the bonds otd Of
9C4. Under TIE acts, there WAS issued to
the Union Pacific Railroad Company for like purpose,
bonds bearing of interest and running for same
term 70 the amount of 1927, 236j12. with aggregate
interest the term OF Si902572l, and masking total
.maturity of $50, ,253.
total Of principal therefore, is'.'.'. s639s2 1@2
aating grand total at maturity bonds Of. 1525l57
This vast to be pad by tine United States, and
to be repaid by the said corporations under ana IN
pursuance of the aforesaid acts of Congress Current
repayment springs from two sources only:
ORIGINAL PLAN OF REPAYMENT.
l. comfy onehaf of the compensation for services
rendered Government by said companies shall be
required TO be applied 10 the payment OF the bonds
issued by the Government in aid Of the construction OF
said roads"-secton ). Act OF July ., 1864.
o after said road is completed until said bonds and
interest are paid at per cent OF the net earnings
of said road shall also DC annually applied to the pay
ment DISQUALIFICATION 6. Act of July l, 1862.
The paid by the United states to January l.
1873 Oh OF bonds issued to these corpora
tons was ssh 23l 20. Under the first OF the above
provisions Of law reimbursement. the United states
had received at said date S7,342 $50 s.. Un6er the
second provision OF law cited, the companies
have made no payment directly, though the United
States retained MI of the earnings for Government
service for the past five yearsonehaf Of which amount
the companies claim shoud have been paid 10 them as
was earned ana which they aver exceeds the amount
lue 10 the Government for per cent OF net earnings
since the roads were completed, under the most liberia
calculation allowed by the law referred to. contio
versy has eXis ed between the Government aud
the said corporations relative to the period at which
the SAID second provision became operative
the former insisting that II herame operative in May
1869 when the tracks of the Union Pacific and Central
Pacific Roads were connected at Promontory, making
their lines continuous. the latter conending tnat 1t did
not become operative until October lS74w when The Pres
ent OF the United states, upon the report of commits
sion appointed by him definitely fix the date Of com
pleton OF said declared their completion as OF
that date. The position Of the corporations in this re-
card has been sustained by the Circnt Courts oil the
United States Districts OF California and Massa
ch1setts consequently nothing can be derived in the
of repay nent under the sad second PROVISION eN
rept net earnings Subsequent to said last-ained
United States aud SAD corporations Inc Ioiner COZ cor,
teUds that the balance o: Toss earnings lelt
Constitute the net earnings which the per cent If
10 be determined aud paid. The corporations piani
themselves the rule lad down by the supreme Court
In ST. John ag Erie Railway Company, ~ wallace 100,
and say that all debts and payments Obligatory
deermne the net earnings from which said per cent
be paid Thus far the position OF the corporations
Of The United States the District of Iowa. II the SUI
prene Court Of the United States should affirm this
result reimbursement OF the United States under
The said second provision
THE PRESENT PLAN INADEQUATE.
At best ana most the reimbursement of the United
States must under both of said provisions Of law foi
repayment fall far below the interest of the
oonds issued to said corporations III aid OF the
construction of their Whatever remains over and
above these current payments OF whatever amount
they may must be carried until the maturity OF
said bonds. This has been settled by the Supreme