, 1885-01-29
SUBSIDIZED ROADS.
How the Senate Proposes to
Handle Them.
A Report That Concerns the
Pacific Railways.
Days Session of the Sill
yer Convention.
New Way to Pay Old Debts.

act anu NJ the SAINT Time reported with .
recommendation for passage. a new bill to
provide for the settlement Of claim
growing cut Of the issue Of bonds to aid in
the construction of the Pacific railroads,
and to secure to the United States the
payment Of all their indebtedness. The
senate ordered the printing in pamphlet
form of 900 copies of the house bill,
senate committees substitute and the ac-
%companying report.
The substance Of the bill is as follows:
To fix a day on which the indebtedness Of
the companies respectively to the govern
ment shall be ascertained, upon the same
principle as if the whole debt and inter
estwere to be paid ON that day, with
proper rebate Of interest at the rate of 3
per cent per annum and deducting from
such amounts all payments made by the
companies iIfmoncy or transportation OF
otherwise, and extending the time at an
interest Of per cent The period for the
extension of the payment Of the last in
stallment Of indebtedness is forty-six years
beyond the date Of maturity of the sub
sidy bonds, or an average extension Of
the whole debt Of twenty-three years.
In consideration Of the extension of time
thus granted the companies are required
to deposit with the secretary Of the treas
ury bonds of redemption for the amount
Of the debt al aseertained in specific sums,
one bond to mature every six months,
and all earnings of the road by govern
ment transportation upon any roads owned,
leased or operated by the company shall
be applied to the payment Of the current
maturing bonds Of redemption, and no
money shall be paid by the government
for transportation or service of any kind
over aided or nonaided roads until the
bonds next maturing shall be fully
paid. 1t extends the statutory
lien and security now subsisting over all
roads owned or operated, or hereafter ac-
quired and wherever situated, by the COM
panies, including telegraph lines, fran
chises, rolling stock and property Of every
kind and description, TO remain as security
for the bonds of redemption until all are
paid, embracing over 5000 miles not now
held as security by the government. It
also requires that the company accepting
the provisions of this bill shall also accept
the provisions Of the Thurman act,
yielding all questions of the constitution
atty of said act. The plan further pro-
vides that either Of said companies may
prepay and discharge the debt in full at
any time, and, as an inducement for such
prepayment, an abatement Of per cent
per mum in interest is allowed, and the
companies are authorized to mortgage
their franchises and property for the pur-
pose of raising funds to redeem these
bonds of redemption if they see fit to do
60. The sinking fund heretofore estab-
lished in the treasury, il discontinued, but
not till the bonds and mortgages provided
for in the bill a1e executed and delivered.
The railroads and telegraph lines are
required at all times to be at
the service Of the government at rates as
low as the lowest accorded any individual
for like service. A failure for six months
to pay any redemption bonds at maturity,
under the provisions Of this bill, renders
all said bonds ~thereupon due and payable.
In order that the companies shall partake
Of the benefits of the proposed plan they
must accept the same under their corpo-
rate seals within three months of the
passage of the act. In case the compa-
MES fail to accept the provisions of the
act within the time specified 35 per cent
Of the annual gross earnings, instead of 25
per cent, shall be collected after the LIST of
July, 1885, and the secretary Of the treas
ury may invest the sinking fund of the
companies in their first mortgage bonds OF
securities Of the United States in his dis
erection, or he may. with the assent of the
COMPANIES, apply the same to the extin-
guishment Of interest on the subsidy
bonds Of the government to refund the
same on demand if at any time it becomes
necessary in order to meet any debts or
obligations Of said corporations prior in
lien to paid interest.
The report accompanying the bill says:
The purpose Of the extension proposed is
to bring the semi-annual payments suf-
ficiently within the ability Of the com
panies to render such payments entirely
certain, and it cannot, in the opinion Of
the committee, be Of any vital conse-
quence to the government whether the
debt be paid in fifty or sixty years 50 long
as its ultimate payment can be certainly
secured. The necessity Of this extension
further appears from the fact that the
frst mortgage bonds. equal in amount
with the subsidy bonds, mature at the
same time and these bonds having under
the act of 1864 priority Of lien over the
government, which stands in relation as
only second lien creditor. must be paid
before the government can obtain any
thing, and such payments would so strain
the resources of the companies that il nc
extension be given, the probabilities ART
that a foreclosure Of the first mortgage
bonds would extinguish the debt Of the
government. unless it is prepared to pay
for the Union Pacific, including the Kan