Sacramento daily record-union. [volume] (Sacramento [Calif.]) 1875-1891, 1885-12-19

or take the road. But suppose to avoid
this contingency. the Government takes the
road itself on its second mortgage what
then? In effect, it pays Sl6D, GOO, 900 for it.
Every one knows that the line could be re
produced for very much less money, and
|, after the Government has the road, what
will II do with it2 If the owners cannot
make ends meet, how would the Govern
ment do so2 Railroad operation is peculi-
arly outside OF the Government function,
and would only add greatly to the loss on
the investment.
Suggestions have been made in Con
gress, most of them impracticable The
first thought of some congressman is to
take more of the net earnings of the road
as was proposed in the Thomson bill
alluded to above; but this avails nothing
when there Is no net. 1t is a complicated
and difficult problem to deal with, and
should be treated as business matter, as
two persons or corporations would deal
with each other. All talk OF compulsory
payment, or seizure of property. is III
judged. There has been no default in pay
ing what is lawfully due, and probably
will be none, until the maturity of the
loans. and consequently there can be no
seizure. Nevertheless the fact remains
that the debt to the Government is year by
year growing larger, and some provision
protecting alike the interests of the roads
and the Government, must be made to
meet the same. 1t should be remembered
too, that the aided proportions Of
| the road are linked and bound together
with other parts not aided and on these
| latter Government has no claim, which of
| course still further complicates the matter
The Government might indeed receive
back the lands as part payment; but Con-
o. II
value of the land grant, deny its value for
| the purpose of canceliing deferred debt
claim.
There remains only the alternative of
putting the annual money requirements to
extinguish this second mortgage debt
within the earning capacity that is, within
| the reach OF the companies; and if that can
be done and still leave something for the
| stock, such solution is obviously desirable,
| for 1t would pat q premium upon The good
| management of its owners. And in this
connection it should ever be borne in
| mind that, rs the case now stands, all the
money paid as interest, or repaid as princi-
| pal, has to be drawn from the earnings :;
! that is, from the amounts paid by the pat
| rons for the use OF the road: 1t is imDos-
| sible to raise the rates for through traffic,
| for the sharp competition of other routes
| prevents it; and 10 levy increased tolls
| upon the local industries and population
would be simply to crush them out and
drive them to other more favored localities.
IL IS in this situation of affairs that the
| bill introduced last winter, and which is
said to have the sanction Of Messrs. Gar
land, Edmunds and Hoar, cagnmcnds itself
| to most favorable consideration. The orig
| inal idea was to fund this subsidy ndebt-
edness into one hundred and twenty fixed
obligations, one of which, with the inter
! EST at 3 per ce1t. on the whole deferred pay
ments. should be payable each six months
| This, however, it was claimed by the conf
.panies, was more than they could presently
meet To spread the interest over the
| longer period, the same as the principal.
would equate the payments SO that at the
| end of thirty wears exactly half OF the prin-
| cipal and half of the interest also would
have been paid, and it is in this form that
| the bill now stands.
Mr.. AdGms. as is known. fayors an en-
tirely different policy. Instead of paying
any surplus earnings into the United States
| Treasury, there 10 remain as practically
dead capital. he would use it all in build
ing new branches and feeders. securing The
! money so employed by the issue of mort
| gage bonds on the new sections, and de-
| post these bonds, rather than tie actual
cash. with the Government. For Curious
reasons, however, there are Objections to
such course of procedure and It docs not
appear that Mr.. Adams is actively opposed
| to the plan contained in the Hoar bill lie
I is prepared to accept It's provisions. even
| though he believes his own plan prefera-
bic, and he thinks, though he viii not
! speak with absolute confidence, that with
both interest and principal evenly distrib-
uted over the sixty years the Union Pacific
| could meet the annual payment imposed
| by the bill.
1t should be said that the bill also con-
taiDs provision permitting the companies
to anticipate nny or all payments and TO
| thar end allowing hem TO issue new bonds
| Tor the amountot The unpaid nstaEments,
and also the amount OF the first MORTGAGE
bonds outstanding a prior lien, as already
| said. TO that OF the United States, the new
| bonds to be secured by mortgage, and bear
ing such rIte of interest, and running such
length Of time, rs might be deemed cxpe-
| dent. The bill in question, it would there
fore seem, cmbodies correct principles and
suggests a mode OF settlement at once feas-
ible and fair, while at The same time it is
Gnopposed by the companies, and has the
support Of the Commissioner of Railroads
and many other thoughtful persons.