Savannah morning news. [volume] (Savannah) 1868-1887, 1885-01-29
PACIFIC RAILROAD DEBTS
SENATORS FAVOR GRANTING AN
EXTENSION.

The judiciary Committee Reports in
Favor of a Substitute for the Thurman
Act-The Government Held to be Only
Secondary Claimant and it's Chances
Rather Slim Unless the Agreement is
Reached.
WAsHINGTON,Ja an. 2S.-The bill relating
to Pacific Railroads, which Mr.. Hoar re-
ported TO the Senate from the Judiciary
Committee late this afternoon is nomi-
nally an amendment in the nature of a
substitute for House bill No. III, with the
title so changed as to read:
\ bill to provide for q settlement of the
claims growing out of the issue of bonds TO
ana 10 secure TO the United States the pay-
ment OF all their Indebtedness.
The bill is, in brief, this:
To fix day on which the Indebtedness OF
the companies respectively to the government
shall be ascertained, upon the same principle
as II the whole debt and interest were to be
pald on that day, with proper rebate of in
terest at the rate OF per cent. per annum,
and deducting from such amount all pay
Hlehts maue by the companies in money. or
transportation or otherwise, and extending
the time at an interest Of per centum. The
period Tor the extension Of the payment of
the last installment of Indebtedness is 46 wears
beyond the date of maturity OF the subsidy
Dohus, or an average extension of the whole
debt of % years.
In consideration of the extension of time
thus granted the companies are required To
deposit with the Secretary Of the Treasury
bonds OF redemption for the amount of the
debL as ascertained in specific sums. one
Dond 10 mature every six MONTHS and all the
earnings Of the roafs by government trans
pOftdtOn upon any roads owned. leased, or
operated by the companies shall be applied
10 the payment of the current maturing
bonds OF redemption, and no money shall be
pald by the government for transportation or
service OF any kind over aided or nom aided
roads until the bond next maturing shall be
fully paid.
1t extends a statutory lien, and the security
now subslstlng over all the roads owned or
operated, or hereafter acquired and wherever
slQated Dy the companies, including
telegraph lines, franchises, rolling stock, and
property of every kind and description, to
remain as security for the bonds of redemp-
tion until all are paid. embracing over 5000
miles of road not now held . is security by the
government. It also requires that the com
Pahy accepting the provisions OF this bill shall
also accept the provisions Of the Thurman
Dll, yleldlng all questions of constitution
allty of said act. The plan further provides
that either OF said companies may prepay and
discharge the debt in full At any time, and as
an mducement for such prepayment an
abatement OF the per cent. per annum in
interest Is allowed, and the companies
are authorized to mortgage their fran
chises and property for the purpose
OF raising funds to redeem these bonds of re-
demptlon, If they see fit to do so. The sinking
ls discontinued, but not till the bonds and
mortgages provided for in the bill are exc
cuted and delivered. Railroad and telegraph
lines are required at all times to be at the ser
vice OF the government al rates as low as the
lowest accorded to any individual for like
service. y failure for six months to pay any
OF the redemption bonds at maturity under
the provisions Of this bill, renders all Of said
bonds thereupOn due and payable. In order
that the companies shall partake of the bene-
hts OF the proposed plan, they must accept
their q r
fore April /, 1856.
THE OBJECT OF THE BILL.
The purpose of the extension proposed is to
bring semi annual payments sufficiently with
IN the ability OF the companies to render such
payments entirely certain. and it cannot, IN
the opinion of the committee, be of any vital
consequence to the government whether the
debt Is paid in fifty or sixty years, so long as
its ultimate payment can be certainly secured.
Ihe necessity of this extension further ap-
pears from the fact that the first mortgage
uOnds OF equal 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 the re-
iallOn OF only second lien creditor, must be
pald before the government can obtain any
thing, and such payments would so strain the
resources of the companies that if no eXten-
sion be given the probabilities are that fore
closure of the first mortgage bonds would
eXtinguish the debt of the government, unless
IL Is prepared to pay for the Union
Pacific, including the Kansas Pacific,
anu loE tuc OeuLIdl racine. eiNIy OOQ MIL
lion dollars to cover the debt with the interest
OF the mortgage which has priority over the
government. If the government became the
purchaser and thereby owner of these roads
1t would thus find itself engaged in the rail
road business generally, which would be
altogether new and very questionable policy
in Its history, and then il is by no means GER
tain that after paying this large prior debt
the government would reimburse itself with
the entire management and control of
the roads in its hands at least for many
years beyond the time contemplated in
the extension provided for b. the bill.
and there IS scarcely any reasonable
probability that the government could relm-
burse itself for tins outlay by any resale of the
roads. Ia the event OF the companies failing
10 accept the provisions of the plan of eXten-
SION, the Thurman sinking fluid act" re-
mains in full force and effect as to all OF the
aided roads, including three lines not hitherto
embraced Hereunder. with the percentage
increased from 25 to 35 per cent. III the
Thurman sinking fund act" remains in force
By neglect of the companies to accept the
plan heretofore described, then the Secretary
OF the Treasury is given enlarged power in
the investment Of the fund. The Attorney
General is required TO look to a strict enforce
Elent of this act.